discsussionsectionhandout4fall2007

discsussionsectionhandout4fall2007 - Econ 102: Fall 2007...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 102: Fall 2007 Discussion Section Handout #4 Supply & Demand: Quotas and Tariffs Exercise #1: Consider a closed economy with the following supply and demand equations for watches. D: P = 50 – Q S: Q = 3/2*P a) Solve for the equilibrium quantity and price, consumer surplus, producer surplus, and total surplus and graph these below. Q S D P b) Now assume they open for trade, and the world price for watches is $10. Draw the effect this has on supply and demand above. Determine consumer, producer and total surpluses for this open economy. Also determine the level of imports. c) Now, there $5 tariff on imports, raising the price to $15. Draw the effect this has on supply and demand below. Determine Qd, Qs, and the amount imported. Also determine consumer, producer and total surpluses, along with tariff revenue and deadweight loss. P 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Econ 102: Fall 2007 Discussion Section Handout #4 d) Now, instead of a tariff, there is a quota, limiting watch imports to 12.5. Draw the effect this has on the supply and demand below. Determine Qd and Qs.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

discsussionsectionhandout4fall2007 - Econ 102: Fall 2007...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online