Effects of Free Trade and Restrictions

Use the graph below to answer the following questions:

Title: Spain Demand and Supply Graph - Description: The graph shows the supply and demand graph of wrenches in Spain. Equillibrium is at 9 wrenches for $7.50.

The graph above shows the demand and supply of wrenches for the country of Spain. 

1.    If trade is avoided, Spain consumes _____ wrenches at a price of _____ per wrench. 

2.    With free trade, for a world price of $4 per wrench, Spain is producing _____wrenches.

3.    With free trade, for a world price of $4 per wrench, Spain is consuming _______ wrenches.

4.    With free trade, for a world price of $4 per wrench, Spain is importing _________wrenches.

5.    If the world price is $4 per wrench, and the government of Spain imposes a tariff of $2, Spain produces ____________ and imports __________wrenches.

6.     If the world price is $4 per wrench, and the government of Spain imposes a tariff of $2, how much tariff revenue will the Spain’s government collect?  _____