Answer Happy

The market for trinkets in the nation of Andoria is perfectly
competitive with supply and demand curves shown
below. The nation of Belladonna exports trinkets at a
fixed price of $8 per trinket, and the nation of Canberra exports
trinkets at a fixed price of $10 per trinket (supply from both
countries is perfectly elastic). Andoria charges a tariff of
$4 per trinket.
(a) From which country does Andoria import trinkets? What
is the price of trinkets in Andoria, and how many trinkets does it
import?
(b) Now suppose Andoria enters into a customs union with
Canberra. Once the customs union is formed, from which
country does Andoria import trinkets? What is the price of
trinkets in Andoria, and how many trinkets does it import?
(c) Show the changes in consumer surplus, producer surplus, and
government revenue in Andoria resulting from joining the customs
union. You may do this by drawing a graph or identifying the
regions by letter (a-r).
(d) Which of these gains and losses represents trade creation,
and which represent trade diversion?