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Suppose the demand and supply for wine within the U. Qd = 100 - 20P [U. demand curve] Qs = 20 + 20P [U. supply curve] Suppose the demand and supply...

Suppose the demand and supply for wine within the U.S. is:
Qd = 100 - 20P [U.S. demand curve]
Qs = 20 + 20P [U.S. supply curve]

Suppose the demand and supply for wine in the rest of the world (R.O.W.) is:
Qd = 80 - 20P [R.O.W. demand curve]
Qs = 40 + 20P [R.O.W. supply curve]

Calculate the deadweight loss if the U.S. imposes a tariff of 25 cents per bottle of imported
wine.


This question was asked on May 18, 2010.

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