Suppose the world price for a good is 30 and the domestic demand-and-supply curves are given by the following equations and displayed by the figure to the right: Demand: P = 90 - 3Q Supply: P 6+3Q a. At the world price, total domestic consumption is 20 units. b. At the world price, the total amount of home production is 8 units. c. The value of consumer surplus is $600 and the value of producer surplus is $ 96. d. If a tariff of 20 percent is imposed, consumption will become 18 units and domestic production will become 10 units. e. As a result of the tariff, consumer surplus will become $ 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- 0 5 10 15 20 25 S 30 Pw D 5 35 40
Suppose the world price for a good is 30 and the domestic demand-and-supply curves are given by the following equations and displayed by the figure to the right: Demand: P = 90 - 3Q Supply: P 6+3Q a. At the world price, total domestic consumption is 20 units. b. At the world price, the total amount of home production is 8 units. c. The value of consumer surplus is $600 and the value of producer surplus is $ 96. d. If a tariff of 20 percent is imposed, consumption will become 18 units and domestic production will become 10 units. e. As a result of the tariff, consumer surplus will become $ 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- 0 5 10 15 20 25 S 30 Pw D 5 35 40
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Suppose the world price for a good is 30 and the domestic demand-and-supply
curves are given by the following equations and displayed by the figure to the
right:
Demand: P =
Supply: P =
90 - 3Q
6 +3Q
a. At the world price, total domestic consumption is 20 units.
b. At the world price, the total amount of home production is 8 units.
c. The value of consumer surplus is $ 600 and the value of producer surplus is
$ 96.
d. If a tariff of 20 percent is imposed, consumption will become 18 units and
domestic production will become 10 units.
e. As a result of the tariff, consumer surplus will become $
100-
90-
80-
70-
60-
50-
40-
30-
20-
10-
0-
0
5
10
15
20
25
S
30
Pw
D
35
40
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