Let us assume that we know domestic demand and supply functions in two large open economies (resp. in a market for 1 commodity in both of the economies). These two countries can trade together, there is no other country in this world. The functions are described in the attached picture. Which of the following claims are true?

Our country (H)

Demand: Q_D = 35000 - 2 P_H

Supply: Q_S = 5 P_H

P_H represents domestic price, we measure the price in Euros.

Foreign country (F)

Demand: Q_D = 35000 - 2 P_F

Supply: Q_S = 3 P_F

P_F represents foreign price (i.e. the domestic price in the foreign country), we again measure the price in Euros.

a.

If the importer country introduces and import tariff equal to 2000 Eur per imported unit, this import tariff will increase the domestic price in the importer country to 7000 EUR.

b.

Our country (H) is going to be the importer country, country F will be the exporter

c.

If our economy (H) remains closed, its domestic (autarky) price will be equal to 5000 EUR

d.

Free trade (relative to autarky) will imply lower overall welfare (relative to autarky) for country F, because free trade leads to higher prices in this country.

e.

Free trade equilibrium price be equal to approximately 5833.3 EUR