Question
Welfare Analysis of Different Trade Policies:Suppose Norway's demand for wi-fi speakers is given by the following equation: P= 290-QD and Norwegian suppliers face the following
Welfare Analysis of Different Trade Policies:Suppose Norway's demand for wi-fi speakers is given by the following equation: P= 290-QD and Norwegian suppliers face the following supply equation P=20 + 0.5QS. Further suppose the world price of wi-fi speakers is PW=$60.
a) Now suppose that the US market for wi-fi speakers is dominated by a monopolist, suppose the US places a quota equivalent to the amount of imports = 90.
i) (3pts) Derive the equation for the residual demand function.
ii) (3pts) Find the profit maximizing quantity of production for the monopolist and the profit maximizing price.
iii) (3pts) Calculate the loss of consumer welfare when we go from a tariff to a quota. (No hand written solution and images)
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