How to q2 parts a b c d and e

2. Suppose that the domestic demand and domestic supply for apples in a country is as follows: Demand: P = 25 - 1 Qd 2 Supply: P = 1 Q5 2 Where Qd and (Is are Quantity demanded and Quantity supplied of apples respectively . (3) Using the information above, draw the domestic demand and domestic supply curve for apples and calculate the domestic equilibrium price and quantity ifthere were no imports. [15 points] (b) Suppose that the world price of apples is (=26 per kg and people in this country can import as many apples as they want at this price, what quantity of apples would be imported into this country ? What quantity would be produced domestically? Illustrate your answer on the graph and explain. On the graph, show the total surplus and who receives this surplus. You do not have to calculate the exact areas. Explain. [20 points] (c) If there were restrictions on trade so that now the government imposes a tariff of 2 per kg on apples imported (new price of imports is now 8). Calculate the level of imports and the total tariff revenue collected by the government after the tariff is introduced. Show this on the graph and explain. [15 points] (d) Who gains from this tariff? who loses? Use a graph when explaining your answer. You don't have to calculate the exact areas ofthe surpluses. [25 points] (e) As an Economist are you in favour of tariffs? Explain why/why not. [Answer should not exceed 2 pages] [25 points]