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2. [MARKET INTERVENTIONS AND GOVERNMENT POLICY] Consider a small open economy. Suppose the domestic supply and demand of corn is Q = 10F and Q
2. [MARKET INTERVENTIONS AND GOVERNMENT POLICY] Consider a small open economy. Suppose the domestic supply and demand of corn is Q\" = 10F and Q\" = 200 10F. Suppose the world price is Pm = $6. [a} (5 marks) Calculate the import quantity of corn1 domestic consumer surplus and producer surplus. {b} (10 marks} Now suppose a $2 tariff is imposed on imported corn. Calculate the nev.T equilibrium price and quantity, domestic CS, domestic PS, government tax revenue, and DWL. {c} {5 marks} Show the CS, PS, government tax revenue and DWL on a graph. {d} [5 marks) Ignore part (b), suppose the govermnent impose an import quota such that the equilibrium price is P = 7. Show the new OS, PS and DWL on a graph
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