Assume Country A and Country B are trade freely for Good A.

Country A is importer and country B is Exporter. Then, Country B imposes an export quota.

a. Please draw the diagram of both countries' market after imposing the export quota. Show how the policy in question affects the following:

i. the world price Pw

ii. producer price (Ps) and consumer prices (Pd) in Home and Foreign; use asterisks to denote

iii. consumer surplus (CS), producer surplus (PS), Government Revenues (GR) in each country

iv. Utilitarian welfare (W) in each country

b. Use the concepts of production distortions, consumption distortions, terms of trade improvement/deterioration, terms of trade gains, and deadweight loss to explain why/whether the policy in question raises or lowers welfare in Home, in Foreign, and for the world as a whole. Use full sentences.