Unformatted text preview: production change? f. What is the post-tariff number of units of import? g. What is the change in consumer surplus and producer surplus, respectively? h. How much revenue does the government earn from the tariff? i. What is the net national cost of the tariff? 3. In what ways are tariffs and quotas similar? In what ways do they differ? 4. Suppose that the domestic demand and supply for hats in a small open economy are given by: Demand: Q = 100 – P; Supply: Q = 50 + 2P where Q denotes quantity and P denotes price. (a)If the world price is 10 what is the free trade level of imports? (b) Suppose that the country imposes a quota of 11 units, how much will the domestic price rise? (c)What will be the welfare effects on this country of a quota of 11 units? (d) Suppose instead that this country negotiates a VER of 11 units with its chief foreign supplier. What are the welfare effects of this policy? 1...
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- Fall '10
- Supply And Demand, producer, world price, Economic Issues GVSU