Suppose that the government of the country levies the

Question

Question: Suppose that the demand for and the supply of a product in a small open country are given by

Q^d = 60 - P and Qs = P - 20. The world price of the product is $36.

(1) Compute the quantity of the product that the country imports from the rest of the world.

(2) Suppose that the government of the country levies the tariff of $2 on the imported product. Compute the deadweight loss, i.e. the loss of welfare, due the tariff.