Assume that the market for soybeans is competitive. The demand for soybeans from users in China is given by the demand curve Q = 90-P, and the supply of soybeans from Chinese producers is given by the supply curve Q = P -20. China buys soybeans from Brazil. The demand and supply curves for soybeans in Brazil are given by Q = 40 -P and Q = P -10.

(a) What would be the price of a soybeans in China and how much soybeans are bought and sold in the absence of trade?

(b) What would be the price of a soybeans in Brazil and how much soybeans are bought and sold in the absence of trade?

(c) Now calculate the import demand schedule for China and the export supply schedule for Brazil. Suppose Brazil and China trade freely in soybeans. Calculate the world price of soybeans and the amount traded.

(d) Calculate the impact of free trade on the welfare of Brazil compared to autarky.

(e) Now suppose Brazil gives an export subsidy of 4. Calculate the new world price of soybeans and the volume traded. What happens to the terms of trade for Brazil?

(f) Calculate the impact of export subsidy on the welfare of Brazil compared to the free situation. Show your results graphically.