Australia imports sugar. With free trade at a world price of $25 per ton, domestic sugar production is 20 million tons and domestic consumption is 75 million tons. The Australia government now decides to impose an import quota limit on sugar imports to only 25 million tons per year. With the import quota limit in place, the domestic price rises to $40 per ton and domestic production rises to 30 million tons. Foreign/world price for sugar falls to $20 per ton.

(a) Calculate the net national welfare/cost for Australia under the import quota program.

(b) Suppose Australia decides to substitute its import quota program with a voluntary export restraint (VER). What is the net national welfare/cost under the VER program?