The world price for baseballs is $24 per dozen, and almost all of them are produced

outside the U.S. Suppose, the U.S. demand curve is QD =100,000 - 2,000P, where P is

The price per dozen and Q is measured in dozens. The U.S. domestic supply curve is QS = -

10,000 + 1,000P. Explain in words and graphically.

a. Before a tariff is imposed, what is the U.S. equilibrium price? Quantity of domestic

consumption? Quantity of domestic production? And the quantity of imports?

• Before a tariff is imposed the U.S equilibrium price is equal to the world price which is $24.
• The Quantity of Domestic consumption is equal to $52,000.
• The Quantity of domestic production is equal to $14,000.
• The quantity of Imports is equal to $38,000.

b. Congress has decided to help the baseball manufacturing industry by imposing a tariff

of $6 per dozen. What is the new equilibrium price? Quantity of domestic consumption

quantity? Quantity of domestic production? And the quantity of imports?

• The new equilibrium price is equal to the world price added with the tariff which equals to $30.
• The quantity of domestic consumption is now equal to $40,000.
• The quantity of domestic production is $20,000.
• The quantity of Imports is now equal to $20,000.

c. What are the losses to U.S. consumers, gains to U.S. producers, revenue gained by the

government, and deadweight loss from the tariff? (Answer in $.)

• Under the Tariff Consumers lose $276,000
• Producers gain $102,000
• Revenue gained by the government is $120,000
• The Deadweight Loss from the tariff is $54,000.

d. What quota level would have the equivalent effect on the price as the $6 tariff?

• The purpose of a quota is to restrict the number of imports to the import level of the tariff that was created. Since the tariff is $6 the Import would be 20,000 units.

e. What is the deadweight loss from the quota? (Answer in $.)

• The deadweight loss after the quota is

I'm not sure if I am right nor how to do the graphs, I only used the numbers provided.