Consider a small country with a Home monopolist and a perfectly competitive global market. The graph below shows the Home market demand function DM with the corre- sponding marginal revenue curve MRM, and the monopolist's marginal cost function MC. The world price of one unit of a good is pW = 25. Home country introduces an import quota which shifts the demand function for the monopolist's products to De and marginal revenue to MR. Price free trade? 20 25 MRQ 40 MC 50 10 De DM 80 Q What is the equilibrium price, country's imports, and monopolist's output under 100 ii. How much of imported good is allowed to be sold at Home under quota? What are the equilibrium price and monopolist output under import quota?

Consider a small country with a Home monopolist and a perfectly competitive global market. The graph below shows the Home market demand function DM with the corre- sponding marginal revenue curve MRM, and the monopolist's marginal cost function MC. The world price of one unit of a good is pW = 25. Home country introduces an import quota which shifts the demand function for the monopolist's products to De and marginal revenue to MR. Price free trade? 20 25 MRQ 40 MC 50 10 De DM 80 Q What is the equilibrium price, country's imports, and monopolist's output under 100 ii. How much of imported good is allowed to be sold at Home under quota? What are the equilibrium price and monopolist output under import quota?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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