Question
The offer is given by P = Qt and the demand is given by P = 1500 - 0,5Qe. P stands for Price and Q
The offer is given by P = Qt and the demand is given by P = 1500 - 0,5Qe. P stands for
Price and Q stands for quantity.
a) Find the market equilibrium (P and Q), the consumer surplus KO and
the producer surplus PO. The market functions are free competition market.
b) The price on the world market is 500. The domestic offer is P = 0.5 Qt. Calculate the new values of the variables you calculated in a), as well as the imports.
c) For the imports to disappear the customs duty have to be introduced. How big must the customs duty in that case be per product. Calculate the total socio-economic surplus, as well
the distribution of it. Draw a figure showing the solutions in one of the three sub-tasks.
Calculate the price elasticity of demand in one of the three.
d) Take the situation described in b) as a starting point and calculate the socio-economic surplus, as well as its distribution. Keep in mind that it's a monopolist in the domestic market.
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