2. Consider the following demand and supply functions for wine for Italy and Spain. D' 180 – 20P' DS 80 – 10PS SI -20 + 10P! -20 + 20PS a) Calulate (i) the equilibrium world price when both countries are OPEN to trade; (ii) quantity exported and imported by each country; (iii) The TOTAL welfare of the importing country.Give exact numbers. b) The importing country introduces a tariff of €2. Calculate (i) the new price in the importing country; (ii) the new free trade price; (iii) the Total welfare of the importing country; (iv) the effect on the welfare of the importing country in comparison with your previous answer. Give exact numbers.

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Q: image attached

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