Question

Consider a competitive market served by many domestic and foreign firms. The domestic demand for these firms’ product is Q^d = 1100 - 2.5P. The supply function of the domestic firms is Q^SD = 50 + 1.5P, while that of the foreign firms is Q^SF = 200.

Instructions: Enter your responses for equilibrium price rounded to the nearest penny (two decimal places). Enter your responses for equilibrium quantity rounded to one decimal place.

a. Determine the equilibrium price and quantity under free trade.

Equilibrium price: $ _____

Equilibrium quantity:______ units


b. Determine the equilibrium price and quantity when foreign firms are constrained by a 100-unit quota.

Equilibrium price: $ _____

Equilibrium quantity: ______units


c. Are domestic consumers better or worse off as a result of the quota?

*Neither better nor worse off

*Worse off

*Better off

d. Are domestic producers better or worse off as a result of the quota?

• Worse off

• Neither better nor worse off

• Better off

Answer 1

Answen! The given infomation Product %21100-45P Sf uilibrium prce lio0s 213 - lloo533 ike equilibrium price d quans loo-unit quota

[Ioo -A.SP Sotsptlbo liboSS SOS ©. Since price has increa ed dueto uota mestic since Censum en SW1 flui will d since Price has tncreajed due to uoto since pnduc Surplus koill increale) nsu men&ae worse ecreafe domeshic Producers are betes ff