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In: Economics

3. The domestic demand for salmon in the U.S. has an inverse demand curve of p...

3. The domestic demand for salmon in the U.S. has an inverse demand curve of p = 150 -3Q. The domestic supply of salmon has an inverse supply curve of p = .050Q. The price is $ per pound of salmon and Q is in millions of pounds of salmon. Assume that the market for salmon is perfectly competitive in a global marketplace.

a. Provide a graph of the domestic supply and demand for salmon and then calculate and show the domestic supply and demand at a world price of $9 per pound.

b. If the U.S. government puts a tariff of $3 per pound on salmon, calculate and show the effects of this tariff on the market for salmon, calculating a new quantity demanded and supplied.

c. Calculate and explain the effects of the tariff on consumer surplus, producer surplus, government revenues and welfare (deadweight loss).

d. Without reworking all of your answers, how would your answer to c. change if the U.S. government placed a quota on salmon instead of a tariff? Explain your answer.

** please answer with detailed math, clear explanation+ graph ***

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Expert Solution

Rahul Sunny answered 1 year ago
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