International Trade Consider the market for books ...

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Economics 101 Homework #3 Fall 2009 Answer Key 1. International Trade Consider the market for books . Domestic demand for books in a small country is given by the equation P= -3Q d + 100. Domestic supply is given by the equation P=Q s . The world price of books is $10. a. Assume that this economy is closed to world trade. Calculate the equilibrium quantity, price, consumer surplus, and producer surplus in the market for books. b. Now assume that this economy opens to world trade. How many units of books th is economy import or export? Calculate the equilibrium quantity, price, consumer surplus, producer surplus , and total surplus in the market for books if this economy opens to trade. Is there a deadweight loss when this economy opens to trade? will
c. Continue to assume that this economy is open to world trade, but now the government has imposed a tariff of $9 per book. Calculate the new equilibrium quantity, price, consumer surplus, producer surplus, and the deadweight loss in the market for books when this economy imposes this tariff. 25 100

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