Problem Set #4

# Problem Set #4 - Below are given the domestic demand and...

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3. (small, open economy)
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Unformatted text preview: Below are given the domestic demand and supply for cut (long stem) roses. demand supply price quantity price quantity \$4.50 25,000 \$4.00 50,000 \$0.25 \$3.50 100,000 \$0.50 \$3.00 150,000 \$1.00 50,000 \$2.50 200,000 \$1.50 100,000 \$2.00 250,000 \$2.00 150,000 \$1.50 300,000 \$2.50 200,000 \$1.00 400,000 \$3.00 250,000 \$0.50 500,000 \$3.50 300,000 \$0.25 600,000 \$4.00 350,000 \$4.50 400,000 a. Find the autarkic (i.e. no trade) equilibrium price and quantity. b. Suppose that the world price is \$1. Will the country import or export roses? How much? c. Draw a diagram. d. Suppose that a tariff of \$1 per dozen is imposed. Find the new equilibrium price, quantity supplied, quantity demanded, imports and tariff revenue. e. Draw a diagram. Show the revenue and the deadweight burden. f. Suppose that the world price is \$4. Will the country import or export roses? How much? g. Draw a diagram. Show the expenditure and the deadweight burden....
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