1. The home country demand for imports is given by M=A(P(1+))D and the foreign export supply is given by E=BPS, where P is the price in the foreign country and is the home country ad valorem tariff rate on imports. a) Suppose that there is an increase in home demand for imports, which is captured by an increase in the parameter A. What factors will determine how much P increases as a result of the increase in demand. b) Explain how data on import quantities and foreign prices can be used to estimate how much of an increase in the home tariff is passed through to domestic prices. 1. The home country demand for imports is given by M=A(P(1+))D and the foreign export supply is given by E=BPS, where P is the price in the foreign country and is the home country ad valorem tariff rate on imports. a) Suppose that there is an increase in home demand for imports, which is captured by an increase in the parameter A. What factors will determine how much P increases as a result of the increase in demand. b) Explain how data on import quantities and foreign prices can be used to estimate how much of an increase in the home tariff is passed through to domestic prices