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In: Economics

Assume that domestic demand function for oil is Q=200-P and the domestic supply function is Q=-20+P....

  1. Assume that domestic demand function for oil is Q=200-P and the domestic supply function is Q=-20+P.
  1. Calculate the perfectly competitive equilibrium quantity and price.
  2. Calculate the consumer surpluss and the producer surpluss at perfect competition.
  3. The country opens up for trade and the world price for oil is only $50. How much oil will be imported?
  4. Calculate the consumer and producer surpluss and deadweight loss/gain (compared to no trade) under free trade.
  5. Assume that the government imposes $10 per unit tariff on imported oil. How much oil will be imported?
  6. Calculate the consumer and producer surpluss and deadweight loss/gain (compared to free trade) under tariff policy

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Expert Solution

Rahul Sunny answered 8 months ago
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