1.   Suppose that the domesticmarket for term papers is represented by the graph below for Collegeland, alarge country. Suppose that the world price of term papers is $100/paper.

a)      Atthe world price, how many papers are imported?

b)      NowCollegeland decides to implement a quota of 8,000 imports to promote theirdomestic researchers, what is the resulting price for consumers? What is theprice for foreign exporters? Label the graph above as in class notes, orredraw.

c)      Whatis the change in consumer surplus, producer surplus, and government revenuefrom the implementation of the quota, assuming that the government can auctionoff the licenses to the highest bidder? Calculate.

d)     Doesthe country win or lose from the implementation of the quota?

e)      Howwould your answer change if the government gave away for free the quotalicenses to the importing producers? What if the government allocates licensesthrough costly selection procedures? Calculate.