Question

Price of Teddy Ben SUS firme D (US Consumers) 0 Teddy Bears Figure 1: The Teddy Bear Market 55) Use the above demand and supply diagram for the teddy bear market to answer the following questions Without world trade, what would be the domestic equilibrium price and quantity? Equilibrium price Equilibrium quantity If the world price is $30, what would the quantity traded in a free-market environment? Quantity! What would be the increase in domestic consumption in a free market? What quantity would be produced domestically? Quantity What quantity would be imported? Quantity - 1fa 510 tariff is placed on imported teddy bears, what will be the new world price? After the tariff, what will be the quantity supplied by domestic producers? After the tariff, what will be the quantity imported? After the tariff, what will be the revenue collection bu

Answer 1

Without trade

Equilibrium price = 55

Equilibrium quantity = 75

World price = 30

Quantity traded = 100

Increase in consumption = 100-75 = 25

Quantity produced domestically = 25

Imports = 100-25 =75

With a tariff of 10

Price = 30+10 =40

Quantity supplied = 45

Quantity imprted = 90-45 =45

Revenue collected = 10*45 = 450