2. Consider the following demand and supply functions for wine for Italy and Spain. D' 180 – 20P' DS 80 – 10PS s' -20 + 10P' -20 + 20PS a) Calulate (i) the equilibrium world price when both countries are OPEN to trade; (ii) quantity exported and imported by each country; (iii) The TOTAL welfare of the importing country.Give exact numbers. b) The importing country introduces a tariff of €2. Calculate (i) the new price in the importing country; (ii) the new free trade price; (iii) the Total welfare of the importing country; (iv) the effect on the welfare of the importing country in comparison with your previous answer. Give exact numbers.

2. Consider the following demand and supply functions for wine for Italy and Spain. D' 180 – 20P' DS 80 – 10PS s' -20 + 10P' -20 + 20PS a) Calulate (i) the equilibrium world price when both countries are OPEN to trade; (ii) quantity exported and imported by each country; (iii) The TOTAL welfare of the importing country.Give exact numbers. b) The importing country introduces a tariff of €2. Calculate (i) the new price in the importing country; (ii) the new free trade price; (iii) the Total welfare of the importing country; (iv) the effect on the welfare of the importing country in comparison with your previous answer. Give exact numbers.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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