Question 5 [25 points): The following diagram pertains to good X for country A, where DA. is the demand for X by A's consumers, SA is the supply curve of X from A's home producers. Suppose cotmtry A is a small coung'y and imposes a $5 tariff on imports of good X from the rest of the world [relative to the free trade price}. The country is considering whether or not to form a 'ee trade agreement {Fret} with cormtry B. Assume that under the FDL country A would import good X only from country B at the FFA price of $l3. The graph below shows how much country A currently imports 'om the rest of the world (at the price with $5 tariff} and how much it would import 'om country E at the PTA. prioe of$13. Tart ptlee FTA price Free trade price 1011' 13:: tat:- zen *1 Asstnning that the intemationa] price of good X in free trade is $l, answer the following questions: a. {4 points} With the $5 tarilT in place, how much does the government collects in tariff revenues? n. {5 points} What is change in consumer surplus in oountryr A from the formation of this trade agreement when compared to the initial situation where the $5 tariff is applied? c. {5 points} What is change in producer surplus in country A 'om the formation of this trade agreement when compared to the initial situation where the $5 tariff is applied? a. {ti points} What is the "net welfare change" in country A from the formation of this trade agreement when compared to the initial situation where the $5 tariff is applied? e. {5 points} Should cotmtry A decide to be part of a trade agreement with comitry E and remove the $5 tariff, or should country A. continue applying the $5 tariff to all countries (including country E]? Explain