Suppose Norway's demand for wi-fi speakers is given by the following equation: P= 290-QD

and Norwegian suppliers face the

following supply equation P=20+ 0.5QS. Further suppose the world price of wi-fi speakers is

PW=$60.

a) Draw a graph for the above supply and demand functions. Numerically calculate social

welfare (SW) in the Norwegian market for wi-fi speakers in autarky.

b) What would be social welfare in Norway for wi-fi speakers under free trade? Also, label

your graph in part (a) showing the level of imports.

c) What would social welfare be under a tariff = $20?

d) What if the Norway instituted an import quota = 90 for wi-fi speakers. What would be the

resulting level of social welfare? Suppose the "quota rent" goes to foreign suppliers.

e) What would be social welfare under a producer subsidy = $20?

f) Which of the following trade policies would you recommend if trade in wi-fi speakers

appeared to be negatively affecting Norwegian workers in the industry? Why?

g) Now suppose that the US market for wi-fi speakers is dominated by a monopolist, suppose

the US places a quota equivalent to the amount of imports in part (d).

i) Derive the equation for the residual demand function.

ii) Find the profit maximizing quantity of production for the

monopolist and the profit maximizing price.

iii) Calculate the loss of consumer welfare when we go from a tariff to a quota.