Question

Answer questions 4 through 10 based on the following information: Suppose the world price for clothing is $50 per unit. Domestic demand and domestic supply are determined by the following equations: Domestic Demand: p=200-4 Domestic Supply: p= 20 + 4 where p and q represent price and quantity, respectively. 4. Suppose that any imported clothing is not allowed to enter the domestic market. Then the equilibrium price of domestic clothing is equal to A) $90 B) $100 C) $110 D) $120 5. Suppose that any imported clothing is not allowed to enter the domestic market. Then the equilibrium production of domestic clothing is equal to A) 50 units B) 65 units C) 70 units D) 90 units 6. Under free trade, the equilibrium production of domestic clothing is equal to A) 25 units B) 30 units C) 35 units D) none of the above 7. Under free trade, the equilibrium quantity of imported clothing is equal to A) 80 units B) 100 units C) 120 units

Answer 1

рхKe supply a kobal price $50 Paulo Domestre dormend p=2009 .20 Prigo supply 260-P = 2 P= 110 y demon P = 2049 30 90 9 = 90 P3110 If p = 650-free trade Noimport . a= P-20 30 units demand = 200-8 = isounits hence excess demand = lrounits y imported share too X106 oh m arted clothing 80 / If tarrif of boy. then price = 508 1.6 domestic at $80 aty qty supplied & P-20 = 6o. aty demanded - 200-805 120 aty imported = 120-60=860 units hence decreased by 50% Import farritts = 0.6x850 x bounits imported) & $1800