Assume that there are only two countries in the world: Belgium and the U.S. Belgium's demand and supply curves for meat are:

q^B_D = 12 p

q^B_S = 3p

1. Derive and graph Belgium's import demand schedule. What would the price of meat in the absence of trade be?

Now add the U.S., which has a demand curve:

q^US_D = 10 2p

q^US_S = 8 + 2p.

2. Derive and graph the U.S. export supply curve, and find the price of meat that would prevail in the U.S. in the absence of trade.

3. Now allow Belgium and the U.S. to trade with each other. Find and graph the equilibrium under free trade. What is the world price?

4. Draw a graph that represents consumer and producer surplus, one graph for the autarky equilibrium and one for the free trade equilibrium in Belgium.

5. Belgium imposes a specific tariff os $1 on meat import. What's the new price of meat in each country? the volume of trade?