In this question, we are calculating the Welfare Effects of Free Trade vs a Ban on Imports (much of this is in the lectures for 8 and 9)

For these questions, please use these Supply and Demand Functions

Q_D(USA) = D(P) = 13.8 - 0.2P

Q_S(USA) = S(P) = 1+3P

1. What is consumer surplus created by the price and quantity determined by the supply and demand functions in Question #3?
2. However, if the world price for this good were $2, how much would be imported and how much would be produced domestically? Hint- some US suppliers can produce at a price of $2 (it is greater than zero, but less than it was at the original price)
3. What is the increase (the change) in consumer surplus created by creating free trade?
4. What is the decrease in producer surplus created by free trade (for the US producer)?
5. Draw the original Supply and Demand Curve and the new one with international trade.
6. What is the increase in welfare caused by free trade?