Question
The nation of Bermuda is small and assumed to be unable to affect world prices. It imports blueberries at the price of 10 dollars per
The nation of Bermuda is "small" and assumed to be unable to affect world prices. It imports blueberries at the price of 10 dollars per box. The Domestic Supply and Domestic Demand curves for blueberry boxes are:
Q(S)=60 + 20P
Q(D)=1160 - 15P
A) Assume Bermuda is completely open to trade. What will be the amount of imports?
B) Now consider the effect of an import quota of 400 boxes.
C) What is the world price (Pw) with the import quota?
D) What is the economic rent that accrues to foreign producers as a result of the quota?
E) What is the loss in efficiency due to the imposition of the quota?
F) Suppose a tariff of 5 dollars is imposed instead of the quota.What is the government revenue from the tariff?
Please show your calculations
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