. Consider a model with two countries, France and Germany. France exports wine to Germ nd Germany exports beer to France. In each country, the demand for wine is given by the dem urve QD 100 - P", where QP is the quantity demanded and p" is the price of wine. In ountry, the demand for beer is given by the same demand curve, i.e., QP-100-PB, where he quantity demanded and PB is the price of beer. The supply of wine in France is given by p", where Q is the quantity supplied, and the supply of wine in Germany is given by QS= The supply of beer in France is given by QS = P, and the supply of beer in Germany is give 2S-2PB. Suppose the government of France imposes a $10 per unit import tax on beer. Find

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2. Consider a model with two countries, France and Germany. France exports wine to Germany,
and Germany exports beer to France. In each country, the demand for wine is given by the demand
curve QP = 100 - P", where QP is the quantity demanded and P" is the price of wine. In each
country, the demand for beer is given by the same demand curve, i.e., Q = 100 - PB, where QP is
the quantity demanded and P³ is the price of beer. The supply of wine in France is given by QS =
2P", where QS is the quantity supplied, and the supply of wine in Germany is given by QS = pw.
The supply of beer in France is given by QS = P², and the supply of beer in Germany is given by
QS=2PB. Suppose the government of France imposes a $10 per unit import tax on beer. Find the
world price of beer, the domestic price in France, and the tariff revenue collected by the French
government under this policy.
Transcribed Image Text:2. Consider a model with two countries, France and Germany. France exports wine to Germany, and Germany exports beer to France. In each country, the demand for wine is given by the demand curve QP = 100 - P", where QP is the quantity demanded and P" is the price of wine. In each country, the demand for beer is given by the same demand curve, i.e., Q = 100 - PB, where QP is the quantity demanded and P³ is the price of beer. The supply of wine in France is given by QS = 2P", where QS is the quantity supplied, and the supply of wine in Germany is given by QS = pw. The supply of beer in France is given by QS = P², and the supply of beer in Germany is given by QS=2PB. Suppose the government of France imposes a $10 per unit import tax on beer. Find the world price of beer, the domestic price in France, and the tariff revenue collected by the French government under this policy.
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