1. Assume the market can be described by the following supply and demand curves.
   Qs=2p
   Qd=300-p
   
   A. Assume the world price is $110 and the small country allows free trade. Does this county import or export? How many units does this country import or export? What are the gains-to-trade allowing free trade compared to no-trade?

2. Assume the world price is $60 and the small country allows free trade. Does this county import or export? How many units does this country import or export? What are the gains-to-trade allowing free trade compared to no-trade?

3. Assume the world price is $60 and the small country restricts trade with a $15 tariff. Does this county import or export? How many units does this country import or export? What are the levels of tariff revenue and deadweight loss from this tariff?

Answer rating: 100% (QA)

Lets analyze each scenario using the given supply and demand curves Qs 2p Qd 300p Scenario 1 World P... View the full answer