Using the graph below, answer the following questions about hammers. Price $22 14 10 LO 5...

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Using the graph below, answer the following questions about hammers. Price $22 14 10 LO 5 50 90 Domestic Supply World Price Domestic Demand 135 Quantity a. Once trade is allowed does this country import or export b. Who does free trade benefit? How do we measure this? Show calculation and interpret the result. c. Who does free trade harm? How do we measure this? Show calculation. d. Overall, is free trade harmful or beneficial? Explain how we measure this. SECTION E L K J W I Riverlands N FE The graph above depicts a market in the country Riverlands which has just entered into a regional trade agreement with the country of Iron Islands. Prior to the trade agreement Riverlands imposed a tariff equal to L-J on goods from the Iron Islands and a tariff equal to K-I on the goods of the country Westerlands. As a result of the regional trade agreement, tariffs will be removed on the goods from the Iron Islands, lowering the price of Iron Islands' goods in Riverlands to J. The tariff remains on the goods of Westerlands. Using the appropriate letters, identify the following. (a) The change in producer surplus as a result of the trade agreement. (b) The total quantity that country Riverlands imports after the trade agreement is implemented. (c) The decrease in tariff revenue collected by the government as a result of the trade agreement. (d) The decrease in resource use in country Riverlands as a result of the trade agreement. (e) The producer surplus before the trade agreement. (f) The trade diversion that arises as a result of the trade agreement. (g) The increase in consumer surplus as a result of the agreement. If K-$200, J-$160, F-120,000, E-180,000, C-200,000 and B-320,000 (h) Will the value of trade creation arising from the trade agreement exceed the value of trade diversion? Show your calculations. Using the graph below, answer the following questions about hammers. Price $22 14 10 LO 5 50 90 Domestic Supply World Price Domestic Demand 135 Quantity a. Once trade is allowed does this country import or export b. Who does free trade benefit? How do we measure this? Show calculation and interpret the result. c. Who does free trade harm? How do we measure this? Show calculation. d. Overall, is free trade harmful or beneficial? Explain how we measure this. SECTION E L K J W I Riverlands N FE The graph above depicts a market in the country Riverlands which has just entered into a regional trade agreement with the country of Iron Islands. Prior to the trade agreement Riverlands imposed a tariff equal to L-J on goods from the Iron Islands and a tariff equal to K-I on the goods of the country Westerlands. As a result of the regional trade agreement, tariffs will be removed on the goods from the Iron Islands, lowering the price of Iron Islands' goods in Riverlands to J. The tariff remains on the goods of Westerlands. Using the appropriate letters, identify the following. (a) The change in producer surplus as a result of the trade agreement. (b) The total quantity that country Riverlands imports after the trade agreement is implemented. (c) The decrease in tariff revenue collected by the government as a result of the trade agreement. (d) The decrease in resource use in country Riverlands as a result of the trade agreement. (e) The producer surplus before the trade agreement. (f) The trade diversion that arises as a result of the trade agreement. (g) The increase in consumer surplus as a result of the agreement. If K-$200, J-$160, F-120,000, E-180,000, C-200,000 and B-320,000 (h) Will the value of trade creation arising from the trade agreement exceed the value of trade diversion? Show your calculations.

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