Country Demand curve (P = S$) Supply curve (P = S$) Singapore P = 76 - 2Q P = 52 + 2Q Thailand P = 68 – 2Q P = 44 + 2Q (Assume that only two countries above involve in Product A in an international market) a) Compute the world equilibrium price and trade quantity for Product A. b) If Singapore government impose tariff of S$4 per unit of Product A, draw a diagram to illustrate the costs and benefits of tariff for Singapore. c) Based on the diagram in part (b) above, compute the following: (i) Producer gain (ii) Consumer loss (iii) Government revenue gain
Country |
|
Supply curve (P = S$) |
Singapore |
P = 76 - 2Q |
P = 52 + 2Q |
Thailand |
P = 68 – 2Q |
P = 44 + 2Q |
(Assume that only two countries above involve in Product A in an international market)
a) Compute the world
b) If Singapore government impose tariff of S$4 per unit of Product A, draw a diagram to illustrate the costs and benefits of tariff for Singapore.
c) Based on the diagram in part (b) above, compute the following:
(i) Producer gain
(ii) Consumer loss
(iii) Government revenue gain
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