Consider a small country. The domestic (home) demand is Qd = 120−3P and supply is Qs = 2P −20 whereQs and Qd are the quantity supplied and demanded, respectively, and P is the price per unit.A) Suppose the government impose a quota that limits the quantity of imports to 20 units. Find thenew equilibrium price, domestic quantity supplied and demanded, and quantity imported.B) Calculate Consumer surplus, producer surplus, and total surplus, with free tradeC) Calculate Consumer surplus, producer surplus, tax revenue, total surplus, and deadweight loss withtrade and the tariff in place.D) How would the deadweight loss and total surplus differ with trade and a quota in place, be specific.
Consider a small country. The domestic (home) demand is Qd = 120−3P and supply is Qs = 2P −20 where
Qs and Qd are the quantity supplied and demanded, respectively, and P is the price per unit.
A) Suppose the government impose a quota that limits the quantity of imports to 20 units. Find the
new
B) Calculate
C) Calculate Consumer surplus, producer surplus, tax revenue, total surplus, and
trade and the tariff in place.
D) How would the deadweight loss and total surplus differ with trade and a quota in place, be specific.
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