Question

Equilibriums and Tariffs

14. Cheap sunglasses. The demand for cheap sunglasses is given by D(p) = 100–2 p and the supply curve is given by S(p) = 3 p. (a) Compute the equilibrium price and equilibrium quantity of cheap sun- glasses. (b) Sketch both the demand and supply curves on the same graph (be sure to label your axes correctly). (c) Determine the value of consumer surplus and producer surplus at the equilibrium values. Suppose all sunglasses are imported from China. Suppose also that the government imposes an import tariff of $10 per unit. (d) Determine the new equilibrium values of price and quality. (e) Determine the tariff's impact on consumer surplus, producer surplus, and total surplus.

Answer 1

Diagrame (b) as price of Sunglasses the cauilibrium level: 0(1) = 8 () 100-3p = Bp 100 = 3p+29 ($ 20 pa $5 B dal quantity of sunglasses (c) po hetonte do so equilibrium price = 20 By putting price in demand functions = 100 - 9x 20 -100-90 I'm above diagram (in, The Consumer's equilibrium is the difference between price P, and p, which is of $20, and producer's equilibrium is the difference between price P and Pz which is of $15. By putting price in Supply function SCP = 3x20 - equilibrium quantity - 60 (d) After imposing $ to per unit: . equilibrium price = 20 +10 = 30 Demand quantity 40 strarlon Supply Quantity ago (@) The Consumer's eneplus will be reduced by $10 and producer's surplux will be increased by $25 per it. After impossing & Lo, price of Sunglasses will increase that will force demand A sunglasses to reduce and supply to increase