Each part worth 10 points, 60 points total.
A large country named H is considering an import tariff to protect the industry that produces good X. The world’s excess supply curve is P=500+6X. Country H’s excess demand curve is P=5000-30X.
a.)What is the equilibrium quantity and price of X prior to any tariff?
b.)What is the total worldwide economic surplus prior to any tariff?
Now suppose the country imposes a tax of 30% of the value the foreign producers receive from any imports into H.
c.)What is the equilibrium quantity sold after the tariff? (May be fractions of a unit.)
d.)What price do foreign producers receive for X sold to H? What price do H’s consumers pay for X?
e.)What is the worldwide deadweight loss due to the tariff?
f.)What is the “unrecoverable consumer surplus” (as I called it in lecture) that is lost by H due to the tariff? What is the “Terms of Trade” gain for H due to the tariff? Yes or no, is this tariff better for H than no tariff?