Based on the information given in the picture, 1. If we do not all trade at all,

Question

Based on the information given in the picture,
1. If we do not all trade at all, what would be the equilibrium price? Equilibrium quantity? 2. If we open up the market to free trade so that the world price dominated, what will be the quantuty demanded? Domestic quantuty supplied? Quantity imported? 3. Suppose the government placed a tariff of $10 per unit imported on this good. How much revenue would they raise?

Please please help! Suppose domestic demand is given by: QD=70-P and domestic supply is given by: Qs=P-30 but the world price of this good is $30.

Explanation / Answer

1) Qd=Qs so 70-P = P-30 so P=50 and Q = 20

2) At world price P=30 Qd = 70-30=40 so domestic demand is 40 andd Qs=30-30=0 so there is no domestic supply and impots = Qd-Qs = 40

3) With tariff of 10 Now P=30+10=40

Qd = 70-40=30 so domestic demand is 30 andd Qs=40-30=10 so domestic supply is 10 and impots = Qd-Qs = 30-10 = 20

Revenue raised by government = 10*20 = $200

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