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Assume the market can be described by the following supply and demand curves. Qs=2p Qd=300-p A....

  1. Assume the market can be described by the following supply and demand curves.
    Qs=2p
    Qd=300-p

    A. Assume the world price is $110 and the small country allows free trade. Does this county import or export? How many units does this country import or export? What are the gains-to-trade allowing free trade compared to no-trade?

  1. Assume the world price is $60 and the small country allows free trade. Does this county import or export? How many units does this country import or export? What are the gains-to-trade allowing free trade compared to no-trade?

  1. Assume the world price is $60 and the small country restricts trade with a $15 tariff. Does this county import or export? How many units does this country import or export? What are the levels of tariff revenue and deadweight loss from this tariff?
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