The Welfare Effects of Tariffs

The following equations represent the supply and demand curves for the USA. a, b, c, are parameters and are > 0.

Supply and Demand in the USA,

US Demand: p_US^d( q )=-aq+b

US Supply:p_US^s( q )=cq

1.Assume the US is in autarky. What is the equilibrium price of sugar in the US?

A. p = (cb) / (c+a)

B. p = (ab + cb) / ( c-a )

C. p = b / ( c-a )

D. p = (c) / (c-a)

2.Assume the US is in autarky. What is the equilibrium quantity of sugar produced in the US?

A. q = cb/(c-a)

B. q = b/(c-a)

C. q = c/(c-a)

D. q = b/(c+a)

3.Determine the import demand curve for the US. That is, quantity imported, im^US, as a function of the world price, p^w.

A. im( p ) = - p ( c+a ) / (ca) + (cb) / (ca)

B. im( p ) = p ( c+a ) / (ca) - (cb) / (ba)

C. im( p ) = - p ( c+a ) / (ca) + (cb) / (ba)

D. im( p ) = p ( c+a ) / (ca) - (cb) / (ca)

4.The following equations represent the supply and demand curves for the Rest of the World. d, e, f, are parameters and are > 0.

Supply and Demand in the Rest of the World (ROW),

ROW Demand: p_ROW^d( q )= - dq+e

ROW Supply:p_ROW^s( q )=fq

Determine the export supply curve for the ROW. That is,quantity exported, xs^ROW, as a function of the world price.

A. xs(p) = -p ( f + d ) / ( df ) - ( fe ) / ( df )

B. xs(p) = -p ( f + d ) / ( df ) + ( fe ) / ( df )

C. xs(p) = p ( f + d ) / ( df ) + ( fe ) / ( df )

D.xs(p) = p ( f + d ) / ( df ) - ( fe ) / ( df )