Consider a demand curve where Q = 20-3P and two supply curves where Q = P + 2 (closed economy) and P = 2 (open economy). a- Draw these three curves on the same captioned graph (add your graph to the appendix) b- What are the price and the equilibrium quantity in a closed economy. c- Evaluate the gains for consumers in an open economy as well as the gains and losses for local and foreign producers. (index: price, quantity consumed, quantity produced locally, imports. Make a comparison between closed economy and open economy.) Calculate the social surplus in an open economy. d- If the government establishes an import quota of 8 units, what will be the changes compared to the previous situation (open economy without protection); calculate the social surplus in this case. e- How much should the price per unit be fixed so that the results are the same as those obtained in question d. f- What should be the price so that the market is distributed one third, two thirds between local producers and foreign producers (this means that the market share of foreign producers is double that of local producers). Indicate your result as a percentage of the price in effect in an open economy without protection.
Consider a
a- Draw these three curves on the same captioned graph (add your graph to the appendix)
b- What are the
c- Evaluate the gains for consumers in an open economy as well as the gains and losses for local and foreign producers. (index: price, quantity consumed, quantity produced locally, imports. Make a comparison between closed economy and open economy.) Calculate the social surplus in an open economy.
d- If the government establishes an import quota of 8 units, what will be the changes compared to the previous situation (open economy without protection); calculate the social surplus in this case.
e- How much should the price per unit be fixed so that the results are the same as those obtained in question d.
f- What should be the price so that the market is distributed one third, two thirds between local producers and foreign producers (this means that the market share of foreign producers is double that of local producers). Indicate your result as a percentage of the price in effect in an open economy without protection.
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