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In: Economics

Domestic Supply for t-shirts, Qs = 100P - 1000. Domestic Demand, Qd = 1000 -1P. Draw...

  1. Domestic Supply for t-shirts, Qs = 100P - 1000. Domestic Demand, Qd = 1000 -1P. Draw the American (domestic) Market for shirts with an Equilibrium DOMESTIC Price of $19.8 a shirt.
    1. The Chinese can supply an unlimited number of shirts for $5.
    2. The Vietnamese can supply and unlimited number of shirts for $7 a shirt.
    3. Draw in the Chinese and Vietnamese price curves. (flat lines)
    4. Assuming there is free trade
      1. How much is domestically produced?
      2. How much is domestically demanded?
      3. How much is imported? And from whom?
      4. Label
        1. PS
        2. CS
    5. Now the US government adds a $10 tariff per shirt on CHINESE IMPORTS.
      1. How much is domestically produced?
      2. How much is domestically demanded?
      3. How much is imported? AND FROM WHOM?
      4. Label with tariff
        1. PS
        2. CS
        3. GR
        4. DWL
      5. Did this tariff help any Americans?

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Expert Solution

Rahul Sunny answered 2 years ago
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