Question
For a particular product, Country A's supply and demand are represented by the following functions:Q s = 0 + P; Q d = 52 -
For a particular product, Country A's supply and demand are represented by the following functions:Qs= 0 + P; Qd= 52 - P. Suppose Country A is a small country (it takes the world price as given) and the free-trade world price is $10.
Numerical answers are required for the questions.
(1) If the government of Country A imposes a 100% tariff on the imports, how much does Country A import?
(2)Moving from free trade to the 100% tariff, by how much does the consumer's surplus change? (Positive number means a gain; a negative number means a loss)
(3)Moving from free trade to the 100% tariff, by how much does the producer's surplus change? (Positive number means a gain; a negative number means a loss)
(4) Moving from free trade to the 100% tariff, what is the deadweight loss for Country A caused by the tariff?
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