handout6 - ECON 101 Principles of Microeconomics Discussion Section Week 6 TA Kanit Kuevibulvanich This week you will learn Demand and Supply

handout6 - ECON 101 Principles of Microeconomics Discussion...

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ECON 101: Principles of Microeconomics – Discussion Section Week 6 TA: Kanit Kuevibulvanich 1 This week, you will learn -Demand and Supply: Application to International Trade oImport/Export in Demand and Supply oTariffs and Quota in International Trade Exercises The demand and supply for coffee beans in Neverneverland are given by P = 800 – and P= Q, respectively. Suppose initially that Neverneverland is in autarky. 1)Solve for the equilibrium price and quantity, consumer surplus and producer surplus. Suppose the Neverneverland government opens the border to international trade. Note that Neverneverland is a small open economy. 2)Given the world price of coffee beans of $200, calculate the equilibrium price, equilibrium quantity, consumer surplus and producer surplus in Neverneverland. How many units of coffee beans are imported into/exported out of Neverneverland? Compared to autarky, who wins and who loses? Graphically illustrate. 3)Repeat part 2) when the world price is $600 instead. From this part on, assume that the world price is $200. Displeased by the influx of Q

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