The market for rice in an East Asian country has demand and supply given by QD = 28 – 4P and QS = -12 + 6P, where quantities denote millions of bushels per day. a. If the domestic market is perfectly competitive, find the equilibrium price and quantity of rice. Compute the triangular areas of consumer surplus and producer surplus. b. Now suppose that there are no trade barriers and the world price of rice is $3. Confirm that the country will import rice. Find QD, QS, and the level of imports, QD – QS. Show that the country is better off than in part (a), by again computing consumer surplus and producer surplus. c. The government authority believes strongly in

Suppose you have the following for white t-shirts market:Market demand is P=125-(3/8)QMarket supply is P=5+(1/8)Q. there is now a global supply that is horizontal at $15. But the government now imposes a tariff of $5 per unit of t-shirt.a. Obviously the world price and domestic price will now be $20. Calculate the quantityproduced and demanded domestically? b. Using graphs show the changes in CS (Consumer Surplus) and PS (Producer Surplus) comparedto Free Trade. Show also the government revenue, which is tariff per t-shirt times the new level of imports. Who gains in comparison to Free Trade scenario? Who loses? What is the welfare gain or loss? Show by using graphs.

This figure shows demand and supply for a product in country A, which is interested in engaging in international trade. The import price from country B is $3 and from country C is $4. Country A imposes a fixed tariff of $2 per unit of import. Answer the following questions based on these assumptions. Demand Supply O creation will be FJ O diversion will be FJ O creation will be TS O diversion will be TS Querits Based on information provided in the figure above, if country A decides to enter into a free trade agreement with country B, the amount of trade

Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and DK is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 60,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota Sk+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 60,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 20 SK K P W 40 60 80 100 120 140 160 180 200 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for…