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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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