Question 1

Home's demand curve for Christmas trees is

D= 12020

Question 1 Home's demand curve for Christmas trees is D = 120 20F. Its supply curve is S = 4|] + EDP. Derive and graph Home's import demand schedule. What would the price of Christmas trees be without any trade?I Question 2 Now add Foreign. which has a demand curve D\" = l ZBP and a supply curve 5" = +20P a} Derive and graph Foreign*s export supply curve and nd the price of Christmas trees that would prevail in Foreign in the absence of trade. h} Now allow Foreign and Home to trade with eachother, at zero trade cost. Find and graph the equilibrium under free trade. What is the world price? 1What is the volume of trade?I Question 3 Home imposes a specific tariff of 0.5 on imports. a) Determine and graph the effects of the tariff on the following: (1) the price of Christmas trees in each country; (2) the quantity of Christmas trees supplied and demanded in each country; and (3) the volume of trade. b) Determine the effect of the tariff on the welfare of each of the following groups: (1) Home import-competing producers; (2) Home consumers; and (3) the Home government. c) Show graphically and calculate the terms of trade gain, the efficiency loss, and the total effect on welfare of the tariff.Question. 4 Suppose that upon Poland\"s entering the European Union, it is discovered that the Cllt of automobile production in Poland is 20,000 while it is 30,000 in Germany. Suppose that the EU. which has a customs union, has an X percent tariff on automobiles and that the costs of production are equal to Y {valued in euros) in Japan. IComment on whether the addition of Poland to the European Union would result in trade creation or trade diversion under the following scenarios: a] X = 50% and Y = 13,000. b} X = 100% and Y = 12,000. c) X = 100% and '1" = 18,000. Question 5 Explain why terms of trade can improve by introducing an import tariff. Which countries benet the most from the terms of trade improvements from import tariffs