Question: Question1 (Version 1) Suppose that there are only two countries in the world (H,RW) that produce and consume only one good: Coca-Cola. H is a

Question1 (Version 1) Suppose that there are only two countries in the world (H,RW) that produce and consume only one good: Coca-Cola. H is a large country with demand and supply curves: D = 500-100P S = 50P+50 RW, which is also a large country, has the following demand and supply curves: D = 1000-300P S = 50P+300 a) What is the price of Coca-Cola in each country with free trade? What are the Coca-Cola imported and exported quantities by each one of the two countries? Calculate the consumer's surplus and producer's surplus in each country. b) Now, H establishes an import tariff of 0.5 on each unit of Coca-Cola imported. What are the prices in each of the two countries? What is the government revenue? What are the CS and PS variation with respect to the free-trade situation ?

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