Question

• Demand and Supply  PC Schedule

  Total Price of  pc In US $	Quantity demanded	Quantity Supplied
  500	0	50
  400	10	40
  300	20	30
  200	30	20
  100	40	10
  0	50	0

  • A) under no international trade (domestic free market )
    • 1) Determine the equilibrium price and quantity of PCs.  (This is in a closed economy)
    • 2) calculate  the  amount of consumer and producer surplus under a closed economy
  • B) under an open economy:
    • a) determine the producer and consumer surplus when  price of  PC is reduced by $100 from the original equilibrium to a new equilibrium due to  free trade with the outside world.
    • b) determine the total number of  imported PC sets
    • c)  what is the size of domestic PC  products ?
  • C) under tariff regime when the government applies a tariff of  $50 on each imported PC
    • a) determine the consumption and production effect
    • b)  the total amount of revenue the government collects
    • c) determine the deadweight loss
  • D)  Summarize in one paragraph how the three scenarios affect the consumer, producers, government, and the overall economy.After going over the above calculation, do you think trade barrier will benefit the country applying such measure? Discuss.

Answer 1