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Suppose that the import demand curve is PD = 100 - 2ID, and the import supply curve is PS = 10 + IS. Calculate the
Suppose that the import demand curve is PD = 100 - 2ID, and the import supply curve is PS = 10 + IS. Calculate the free-market equilibrium.
Now suppose that a fixed tariff of T = 15 is levied on imports. Calculate the new equilibrium, including the new level of imports, the domestic price, the world price, and government tariff revenues.
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