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The demand and supply functions for computers in the Home market are: D:wUP 5 3 S = 2 where D is the quantity demanded by
The demand and supply functions for computers in the Home market are: D:wUP 5 3 S = 2 where D is the quantity demanded by Home consumers,S is the quantity supplied by Home sroducers, and P is the price. Similarly, the demand and supply functions in the Foreign market are: _ 100 - PF B SF = oPF DF 1. Find out consumer surplus and producer surplus of the Home country in autarky. (3pts) 2. Derive the import demand function of the Home country and the export supply function of the Foreign country. Solve for the equilibrium price of computers in the world market. (3pts) 3. What is the total gains from trade in terms of total social welfare, whn= 07 (3pts) Now the home country imposes an import tariff = 4: for every computer imported into the Home market, the foreign firm needs to pay4 to the Home government. 4. Find the new equilibrium price in Home market after the tariff is imposed. (3pts)
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