Econ question show ans and steps(graph)! The market for USB flash drives in Coun

Question

Econ question show ans and steps(graph)!

The market for USB flash drives in Country A is perfectly competitive and is in equilibrium. Domestic demand is given by Q 1800 4P and domestic supply is given by Qs 2P The world price for flash drives is $10. Now, a tariff of $10 is imposed on a imported flash drives.. What is the dollar value of the deadweight loss caused by the imposition of this tariff? O 1) Deadweight loss less than $100 O 2) Deadweight loss at least $100 but less than $160 O 3) Deadweight loss at least $160 but less than $220 O 4) Deadweight loss at least $220 but less than $280 O 5) Deadweight loss at least $280 ($280 or more)

Explanation / Answer

Given :

Qd = 18 -4P, and Qs = 2P

Equilibrium is given by :

18-4P=2P

6P=18

P=3

At this point of price =3. Q demanded and Q supplied = 6 units

When tariff is imposed new price,

P=13

Then Qd = 18 -52 = (34) ( zero demand)

     Qs    = 26

Deadweight loss = $280 or more

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