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Question 4 15 pts The market for watches in ABC is given as follows: Supply: Q5 = 500 + 2P Demand: Q0 = 700 3P Note: Be sure to show your calculation. A) Does ABC export or import watches if the initial world price of a watch is $68? What is the level oftrade (i.e., the quantity exported/imported)? (5 points) ABC is a Egg open economy in the world market for watches, and studies show that imposition of any trade policy by ABC will change the world price by $5 per watch (i.e., the world price of watches will either increase or decrease by $5 after the imposition of trade policy). Now, suppose the government of ABC provides an export subsidy of $7 per watch to its rms. B) Explain what happens to the world price of a watch. Find the new level of exports. (5 points) C) Find the change in total surplus in ABC (Be sure to show the numbers). (5 points) Upload Choose a File