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2) Assume that the domestic supply and demand for a good are given by the following equations. Q= 400 - 30 P Q = 50 + 20P a. If the world price is $4, what is the free trade level of imports?Calculate the net welfare effects of a quota of 50 units. (Quota rent captured by the government) Use also graph to show the effects of this quota.

2) Assume that the domestic supply and demand for a good are given by the following equations. Q= 400 - 30 P Q = 50 + 20P a. If the world price is $4, what is the free trade level of imports?Calculate the net welfare effects of a quota of 50 units. (Quota rent captured by the government) Use also graph to show the effects of this quota.

ECON MICRO
ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter19: International Trade
Section: Chapter Questions
Problem 2.6P
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2) Assume that the domestic supply and demand for a good are given by the following equations. Q= 400 - 30 P Q = 50 + 20P a. If the world price is $4, what is the free trade level of imports?Calculate the net welfare effects of a quota of 50 units. (Quota rent captured by the government) Use also graph to show the effects of this quota.
Transcribed Image Text:2) Assume that the domestic supply and demand for a good are given by the following equations. Q= 400 - 30 P Q = 50 + 20P a. If the world price is $4, what is the free trade level of imports?Calculate the net welfare effects of a quota of 50 units. (Quota rent captured by the government) Use also graph to show the effects of this quota.
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