In Iceland, the demand and supply of beef farms is described as follows demand and supply functions (P represents the price per piece in Euros, all examples in Euros): (Use exact calculations with one decimal place not rounded whole numbers throughout the example). QD = 298- 2P QS = -1 + 2P The world market price of beef is 20 Euros. per pc. a) Calculate and draw balance on a picture i) if no trade with foreign countries is allowed. ii) if a 24% VAT is imposed on domestic producers and trade with foreign countries is prohibited. iii) how is the tax burden divided in point ii) and what are the explanations its? iv) if a proportional tax was imposed on consumers. What would he need? a tax on the price to consumers should be that earned the government the same revenue and before? Show the effect of such a tax on a figure compared to the market without tax.

b) Due to recent high inflation, the government has decided to stop the imposition of value added tax on cattle yards as soon as they have decided to give the importation of cattle free. Calculate the domestic production, domestic consumption and imports. Draw a picture and calculate and profits from the opening of business (let there be no value added tax been there for freedom).

c) Domestic farmers have strongly protested the government's decision to free import. Due to the pressure of special interest groups of farmers has a decision has been made to impose a 25% duty on world market prices of importation. i) What will be the price, import, demand and domestic supply. ii) How does producer and consumer benefit change from point b)? iii) What will be the macroeconomic loss due to tariff compared to free business (without VAT)?

d) Due to further domestic pressure, the decision on customs is changed earlier customs duty is revoked, but customs duties will now be 120% on world market prices (no VAT). i) What will be the price, import, demand and domestic supply in? the new balance? ii) What will the macroeconomic loss due to the super tariff be compared to? free trade without VAT?