(d) Explain what happens when there is trade between Home and Foreign - find the equilibrium with world trade. Can you say whether there are more or less firms operating in the Home country? Explain. (e) What are the benefits that arise with trade. 3. Home is a large country. The demand for a good at home is Q = 14 - P and the supply for the same good is Q$ = P _ 4. The Foreign export supply function is Oxs. = 3P. _ 3. (a) Calculate Home consumer, producer and total surplus in the absence of trade. (b) Determine Home's import demand function. (c) Determine the price of the good when Home and Foreign engage in free-trade. How much of the good does the home country import? (d) Determine Home's consumer, producer and total surplus under free trade. (e) If the Home government imposes an import tariff in the amount of t = $3, find the new levels of consumer, producer, government and total surplus. Does the import tariff t = $3 increase Home's welfare? 4. Home is an importer of violins. The Demand for violins at Home is Q = 1000 _ 1P and the Supply of violins at Home is @$= 1 P_50. Foreign Export Supply of violins is QXS- = 3 P_150. (@) Find the price of a violin in the Home country when there is no trade. (b) When there is free-trade with the Foreign country, determine the price of a violin in Home and Foreign and determine the volume of trade (amount imported). (c) Show the gains to the Home country arising from the move from autarky to free- trade in (?) a graph that shows Home's Supply and Demand and (12) a graph that shows Home's Import Demand and Foreign's Export Supply. (d) If the Home country puts in place a Tariff Rate Quota (TRQ) with in-quota tariff, = $1000, over-quota tari If to = $5000 and quota level @ = 200 show a graph of Home's Import Demand (MD), Foreign original Export Supply (AS.) and the modified Export Supply function reflecting the TRQ, Stro (e) Calculate the new price of a violin in both the Home and Foreign market when the TRQ is in place. Determine the new volume of trade. (f) Show the changes to welfare in the Home country arising from the imposition of the TRQ in (?) a graph that shows Home's Supply and Demand and (12) a graph that shows Home's Import Demand and Foreign's Export Supply. 5. A small country has the following tariff structure on leather products: raw materials 5% semi-manufactures 15% finished products 35%