Question

1. Suppose that we know the following demand and supply equations of a good as: po=10+20° pº = 40- 1A (Spoints) Draw the graph of the above demand and supply (must clearly label and appropriately scale the axes for full marks). 1B (5points) Find the equilibrium quantity and price, algebraically (must clearly show your work all appropriate steps for full marks)? IC (4 points) At the equilibrium price found in part B, find the consumer and producer surpluses (must clearly show your work all appropriate steps for full marks)? 2. Use figure #1 below to answer the following questions. 2A. Refer to Figure #1 below. (2 Points) When the country is opened for trade, what are the domestic price, domestic quantity demanded, and domestic quantity supplied? 2B. Refer to Figure #1 below. (2 Points) When the country is opened for trade but imposes a tariff to protect its producers. With the tariff, what is the domestic price, domestic quantity demanded, and domestic quantity supplied (must clearly show your work all appropriate steps for full marks)? 20. Refer to Figure #1 below. (2 Points By imposing 58 per unit of imports, calculate the amount of revenue collected by the government (must clearly show your work all appropriate steps for full marks) 2D. Refer to Figure #1 below. (2 Points) Calculating the consumer surplus after the tariff is imposed (must clearly show your work all appropriate steps for full marks) 2E. Refer to Figure 1 below. (2 Points) Calculating the producer surplus after the tariffs imposed (must clearly show your work all appropriate steps for full marks)

Answer 1

- 10+205 PP = 40-GD SA p: 40- POT5110115720 25 30 35740 4351 325/2015/05 : 10+245 PSI20130140/50/60/70780120 05 10 15 20 25 30 3540 */40,90 F2 (10,40) Ks (Equilibrium (10,3d. 2- 40-80 660/0) - 25 3 5 mins

1 ) At g uli Bящим, Dennand = Supply 40-Q 10+2Q I we can write a casa Yo-Q = 10+ 29. 40-10 = 20 ta. 30 = 30 Q* - 30/3 =10 TQ* = 10 → Equilibrium Quantity p* = 40-Q* 1 2 :409-10 pt = 30 P* - $30 Equbornem fric.. 1. Consunia suaplus i Ý Ite area above the price and bolowe the demand curve. de Area of A ABE . and area above G Product suplus is the abo below the price and the supply curve. lei Area of j CBE Now, es = AX A B X BE = I x CDA-OB) x 100 Now PS - Ix(40-30 X 10 = I x 10 x lo es = $501> cousines sukples IX BEX BC = I x 100*) X COB-09) =Ix toxt 30-lo) 1 x 10 x 20 200 100 $100 l Produan surplus.