B4. (18 marks) Consider a model with three countries: Austria, Bavaria, and Czechia. The demand and supply equations for beer in Austria follows DA = 120 - 1.4PA, SA = 2+ 0.6PA, where DA, SA refer to quantities demanded and supplied in Austria at the price PA, respectively. The unit cost of beer production is $45 in Bavaria, and $28 in Czechia. Currently, there is a 100% tariff on beer imports into Austria. Assume that there are no transportation costs. a. (3 marks) What is the price of beer in Austria? How many units of beer (pints) will Austria import, and how much tariff revenue will the Austrian government collect? Suppose now that Austria signs a free trade agreement (FTA) with Bavaria. Use this information to answer parts (b) to (e). b. (3 marks) How many units of beer (pints) will Austria import, and from which country? c. (3 marks) Is this the case of trade creation or trade diversion as a result of Austria forming an FTA with Bavaria? Explain why. d. (7 marks) Plot the demand-supply curve of the beer market in Austria. Calculate the total welfare gain/loss to Austria as a result of the Austria-Bavaria FTA. e. (2 marks) Can Czechia complain about the removal of tariff between Austria and Bavaria to the WTO? Why or why not