The domestic demand for goods X is D_d = 100 - 20P. The domestic supply of good X is S_d = 20 + 20P
a. Draw the domestic demand and supply curves for good X. (Remember the price appears on the vertical axis in the graph)
b. If the country allows no trade in good X, what are the equilibrium price, quanity produced, and quanity consumed?
c. Imports of good X are available in the world market at P_x = . Draw the total supply curve. If the coutry allows free trade in good X, what are the equalibrium price, quantity produced domestically, quanitity consumed domestically, and quantity imported?
d. If the country imposes a specific tariff of t = 0.5 per unit of imported X, what are the equalibrium price, quanitity produced domestically, quantity consumed domestically, and quantity imported?
e. Who gains and who loses fro the tariff? Does national welfare ride or fall?