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Tari's never make small countries better oft? but there are cwes where they can make a large country better oil. Draw side-by-side graphs for a
Tari's never make small countries better oft\"? but there are cwes where they can make a large country better oil. Draw side-by-side graphs for a good {call it \"toothpicks\"}l where the small country can produce the good at a lower price than the large country. In this problem: SA: P=5+1.1Q DA: .i'3"=14l..llf.;lI 33: P=2+1.1Q D3: l"_"=11':|Lit;i Note that there is a worked example similar to this in the lesson. DID NOT just copy what was done in the lesson. Thinlr through the problem independently and he sure to explain your notation. a] [5 points) Which country is the small country? How do you know? b} [15 points) Show the domestic price and quantity in each market? free trade price [needs to be the same in both countries]? and the imports and exports in both countries. He sure to label prices and quantities on your graph. c] {It} points) The large country impmee a tariff of T = $1.0 resulting in a domestic price that is below its autarlry price. What happens to the world price after this tari'? Why? Note: you do not need to calculate actual numbers for this part. d] {It} points} Show the tariff on the gaph. How much is imported now? How much is exported? e] {It} points} Show on the graph {and describe in words} how you would know if this tariff is welfare- enhancing
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