Question 11. Show math please. Figure I shows the Home market for PCs. Home coun

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Question 11. Show math please. Figure I shows the Home market for PCs. Home country is a small country and PC market is a perfectly competitive market. Answer questions 11-13 according to Figure I 11) The government decides to import PCs due to lower world price, but restricts free trade by imposing an import quota of 200,000 PCs. How many PCs are produced domestically and how many PCs are consumed domestically after the quota is imposed? Figure 1 Supply $30 300,000; 500,000 00,000; 600,000 B) 500,000; 700,000 D) 600,000; 400,000 $10 Demand 12) If a tariff of $10 restricts trade by the same amount as the quota as in questio 200 300 400 50o 600 700 o0 chousands) 11, then the free trade world price of one PC must be_ 0 C) $30 A) $10 B) $20 D) $40

Explanation / Answer

11. Since the government imposes an import quota of 200,000 PCs. So according to the diagram, according to the supply curve, we find that the domestic production of the PC is 400,000 and the domestic demand is 600,000.

12. The free trade world price of one PC must be $20. Hence a $10 of tariff restriction would make the price equal to $30 corresponding to our demand and supply analysis.

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