Assume that the domestic demand for a certain product is equal to P = 1,000 5Q.

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Assume that the domestic demand for a certain product is equal to P = 1,000 − 5Q. Assume further that the domestic supply for the same product is equal to P = 500 + 5Q. With free trade, the supply curve is horizontal at a price equal to $700.

a. Find the equilibrium quantity with free trade.

b. Now, assume that the domestic government imposes a tariff of $25 per unit of the product. Find the new equilibrium price and quantity.

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Related Book For answer-question

Air Transport Economics

ISBN: 9781032482538

4th Edition

Authors: Bijan Vasigh, Brian Pearce

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Question Posted: Feb 02, 2024 02:04 AM

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Assume that the domestic demand for a certain product is equal to P = 1,000 5Q.

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Air Transport Economics

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