Micronia is a small open economy with demand, D=300-10p, and supply, S=125+5p. It imports raisins at the price of MC$5 per pound.
a. Calculate the effects on consumer surplus and on producer surplus in Micronia when a quota is imposed that limits its imports to 70 lbs. Are there any additional welfare effects, positive or negative? explain.
b. Calculate the effects on consumer surplus and on producer surplus in micronia when a tariff of MC$2 per pound levied on imports instead of the above-mentioned quota.