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

Economics (MindTap Course List)
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Author:Roger A. Arnold
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Chapter33: International Trade
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Problem 6QP
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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

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