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Let's assume, that two countries intensify their trade relations. In the importing country the prices decrease, while they increase in the exporting country. The graphic below shows you the situation in the importing country: Prices drop from P' to P". Home price Supply price P P P A C C B D E Home Home Demand import demand curve, MDH Z" Z' C' C" quantity M' M" imports a) By how much do producers in the importing country have to decrease their production after the trade intensification? Why do they reduce their production? b) How much is imported at the price of P"? By how much does the imported quantity change due to the trade intensification? c) What do domestic consumers gain in welfare? Why do they benefit from the trade intensification? d) Do domestic consumers gain more than domestic producers lose? If so, by how much