In this question, we study the consequences of trade policies on the automobile market. we assume that cars are all similar on the market (in other words, a car is a homogeneous good). the supply of japanese cars is perfectly elastic at a price pj = 20. moreover, the supply of cars made in the us is qsus = p − 15 for any price larger than 15.
finally, the demand for cars from american consumers is qd = 30 − 1/2p.

1. we now assume that the american economy opens up to trade. as a consequence, american consumers can buy japanese cars. what will be the new equilibrium quantities and prices? how many cars will be imported and how many will be produced domestically?
2. on a new graph, plot the supply of car on the american market, the new equilibrium and the consumer and producer surpluses.
3. what are the new consumer and producer surplus in this new context? who is winning or losing from opening the economy to international trade? what is the overall effect on total welfare?