3. Suppose the world price for a good is 40 and the domestic demand-and-supply curves are given by the following equations: Demand: P-80-2Q o Supply: P=5+3Q a. How much is consumed? b. How much is produced at home? c. What are the values of consumer and producer surplus? d. If a tariff of 10 percent is imposed, by how much do consumption and domestic production change? e. What is the change in consumer and producer surplus? f. How much revenue does the government earn from the tariff? g. What is the net national cost of the tariff?

3. Suppose the world price for a good is 40 and the domestic demand-and-supply curves are given by the following equations: Demand: P-80-2Q o Supply: P=5+3Q a. How much is consumed? b. How much is produced at home? c. What are the values of consumer and producer surplus? d. If a tariff of 10 percent is imposed, by how much do consumption and domestic production change? e. What is the change in consumer and producer surplus? f. How much revenue does the government earn from the tariff? g. What is the net national cost of the tariff?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 2PA

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