Consider a competitive market served by many domestic and foreign firms. The domestic demand for these firms' product isQ^d= 700 - 2.5P.The supply function of the domestic firms isQ^SD=100 + 1.5P,while that of the foreign firms isQ^SF= 250.

Instructions:Enter your responses for equilibrium price rounded to the nearest penny (two decimal places). Enter your responses for equilibrium quantity rounded to one decimal place.

a. Determine the equilibrium price and quantity under free trade.

Equilibrium price: $___________

Equilibrium quantity:_________units

b. Determine the equilibrium price and quantity when foreign firms are constrained by a 100-unit quota.

Equilibrium price: $_________

Equilibrium quantity:________units

c. Are domestic consumers better or worse off as a result of the quota?

multiple choice 1

• Worse off
• Better off
• Neither better nor worse off

d. Are domestic producers better or worse off as a result of the quota?

Select answer below

Better off

Worse off

Neither better nor worse off