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Tariffs Problem The following equations represent a small country's home supply and demand curves for widgets: S = 0 + 2P and D = 1000

Tariffs Problem

The following equations represent a small country's home supply and demand curves for widgets:

S = 0 + 2P and D = 1000 - 2P

a) Find the equilibrium price and quantity for widgets in autarky.

b) Now let the world price be $200. Find domestic production, domestic consumption, and the amount of imports.

c) Derive the country's import demand curve for widgets.

d) Let the country impose a 10% tariff. Calculate its deadweight losses.

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