J. Does the tax cause deadweight loss (DWL)? If so, label the area on the graph and find its value by calculating the change in total surplus (or finding the area of the triangle). e. What is the policy goal of an excise tax? Based on your analysis above, was that goal achieved with this policy? How do you know? f. With that in mind, briefly describe the tradeoff the government is weighing when it implements an excise tax. What are the benefits, and what are the downsides? 3) Welfare Analysis: Trade (8 points) Finally, instead of imagining a price ceiling of $6, let's suppose that this is a tiny country that opens up to trade, and the world price is $6 per widget. Assume that this country is a small enough part of the world market that its decision to open up to trade does not impact the world price. a. What is the domestic equilibrium price and Supply and Demand for Widgets quantity of widgets under autarky? Price P* = $_ $22 Q* = $20 widgets $18 b. Draw the world price on the graph and $16 clearly label the domestic quantities $14 supplied and demanded with trade. $12 Quantity supplied: widgets $10 $8 Quantity demanded: widgets $6 C. Will this country be a net-exporter or net- $4 importer of widgets, and how many widgets will be imported or exported? 20 40 60 80 100 120 140 Quantity