申論題

一、

(二) Suppose the domestic supply and demand for Good X in Malaysia are QA ^s ＝ -10+P, and QA ^d ＝ 70-P, respectively.
 Due to the excess domestic demand for Good X in Malaysia, Good X has been imported from the Republic of China (hereafter, Taiwan) and the Republic of Korea (hereafter, Korea) at the costs of US$20 and US$25, respectively. In addition, the Malaysia Government levies a specific duty at US$10 per unit. Now, Malaysia decided to sign a free trade agreement (FTA) with Korea, but not with Taiwan.
Draw a diagram and calculate to illustrate what the impacts are for Malaysia, of the trade creation and trade diversion as well as the total welfare effects after exempting the import tariff on Good X from Korea? (15 points)