(30 pts) In a given industry, there is only one producer (monopolist) serving the domestic market of a country. This producer faces the domestic market demand, which is: Qd = 20 P The marginal cost curve is MC = 2Q. The firm can sell its product in the domestic market and in the external market. In the external market, the firm is a price taker, with the price given by PW = 14. Moreover, the product cannot be bought overseas and exported back to the domestic market. (a) (6 pts) Calculate: (i) total quantity produced; (ii) quantity sold in the domestic market; (iii) quantity exported; (iv) price in the domestic market. Illustrate this solution in a diagram. Suppose now that the government imposes a specific tax t on exports. That is, for each unit exported, the firm gets PW t . (b) (6 pts) Calculate, as function of t: (i) total quantity produced; (ii) quantity sold in the domestic market; (iii) quantity exported; (iv) price in the domestic market. Illustrate using the diagram in part (a). (c) (12 pts) Using the same diagram, analyze the effect of the tax on: (i) consumer surplus, (ii) producer surplus, (iii) government revenue, (iv) overall welfare. (You just need to label the relevant areas in the diagram and indicate (i), (ii), (iii) and (iv). No need for explanation here). (d) (6 pts) Calculate the welfare effect of the tax, as a function of t. Calculate the optimum tax, that is, the one that maximizes overall welfare.