The demand curve for (pairs of) fancy leather shoes in a small island nation is given by

d=20004

The aggregate supply curve of the domestic manufacturers of fancy leather shoes is

s= 6

a. What is the equilibrium price and quantity?

Suppose the government allows foreign manufacturers to sell shoes in the country, and that the price in the world market is$140. The country can buy as many pairs of shoes as it wants at this price, being too small to influence it (by purchasing different amounts, that is).

b) What would be the new price for pairs of shoes in the country? At this price, how many pairs of shoes would be produced domestically, and how many would be imported?

c) Compute the corresponding domestic consumer surplus and domestic producer surplus.