Domestic Market Supply and Demand: QD = 90 – 3p QS = 2p Find the domestic market equilibrium. Graph the impact of opening to international trade with a world price of 8, clearly labelling the new consumer surplus and producer surplus. Graph the impact of a tariff of 4/unit on the market, and clearly labeling the new consumer surplus, producer surplus, government revenue, and deadweight welfare loss.

Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
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Domestic Market Supply and Demand:

QD = 90 – 3p

QS = 2p

  1. Find the domestic market equilibrium.
  2. Graph the impact of opening to international trade with a world price of 8, clearly labelling the new consumer surplus and producer surplus.
  3. Graph the impact of a tariff of 4/unit on the market, and clearly labeling the new consumer surplus, producer surplus, government revenue, and deadweight welfare loss.
  4. Find the exact numerical amount that the tariff affects consumer surplus, producer surplus, government revenue, and total welfare, compared to allowing for international trade with no tariff.
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