Analyze the country of Canada. Canada allows free trade, and in Canada, the domestic price of televisions before trade is above the world price of televisions. Without trade restrictions and with free trade, Canadian consumers buy 1 million televisions per year, of which 400 000 are produced domestically. Now, there has been technological progress in Japan television manufacturing that causes the world price of televisions to fall by $100. After the fall in price, in Canada, consumers buy 1.2 million televisions, of which 200 000 are produced domestically.

• Analyze the welfare effects of free trade (e.g., calculate the change in consumer surplus, producer surplus and total surplus from the price reduction) Show how this change affects the welfare of Canadian consumers, Canadian producers and total surplus in Canada.
• If the government of Canada responded by putting a $100 tariff on imported televisions, what would this do? Would this be a good policy? Who might support and oppose this policy?
• Assume that the fall in price is not because of technological progress, but a result of a $100 subsidy per television from the Japanese government to Japanese industry. How would this affect your analysis?

Explain thoroughly with graph + words.