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Suppose that in the domestic market for computer chips the demand is Pd = 110 - 0, and the domestic supply is P5 = 10
Suppose that in the domestic market for computer chips the demand is Pd = 110 - 0", and the domestic supply is P5 = 10 + 05. Foreign suppliers would be willing to supply any number of chips at a price of $30. The government is contemplating two possible policies: Policy I: Foreign suppliers are allowed to import chips (free trade). Policy II: The government allows imports, but imposes a tariff of $10 per unit. a) What is the size of the domestic consumer surplus (CS) and domestic producer surplus (PS) under policy I? b) What is the size of domestic consumer surplus (CS), domestic producer surplus (PS), and government revenue under policy
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