Question

1. Suppose the price of dragonglass is 10 gold for both country Lannister and country Targaryen, if before any international trade, country Lannister’s supply for dragonglass is 600, and country Targaryen’s demand for dragonglass is 600 and supply is 1000, if we assume that the exporting country have exactly amount of dragonglass that the import country would like to import, then after the international trade happened during this two countries, please state which country will import dragonglass and by how much?

2. If the import country posted a tariff on dragonglass by 10% of it’s value. And the total import amount compare to before drop 200 units, please state that what would be the new demand and supply for this import country?

3. If the import country posted a tariff on dragonglass by 10% of it’s value. Due to this reason, the price of this product at the exporting country drop by 2 gold. Please state that what will be the total loss in the export country?

4. What will be the total loss of consumer surplus of import country? And what will be the total tariff revenue of this country? And what would be the total increase of producer surplus of this country?

5. What is the actual tariff after the trade if you combine two countries’ situation? Do the import country gain on this international trade? Why and if so, by how much?

6. Which Stark will live after April and why? (Extra credit)

Answer 1

1.country Lenisters dragon glass supply is 600

Country targaryens dragon glass supply is 1000

Country targaryens dragon glass demand is 600

Here there is excess of400 dragon glass with country Targaryans (i. e. 1000-600)

So country Targaryans will import dragon glass by 400.

2,Tarrief posted on dragon glass ia 10% by imported country

Import drop by 200units

The New supply will be 400-200=200

And senang will be 600 from owncountry+200 by importing. =800

3.price drop by 2 gold

Price will be 10 gold-2gold=8gold

Demanded dragon glass =200

Value of 200 dragon glass=8/1000*200=8/5=1.6gold

Tarrif on dragon glass 16/10*10/100=0.16

Now the earning is 8+0.16 gold=8.16

Previously it was 10 gold

So the total loss=10-8.16=1.84golf

4.total loss of consumer surplus

1.6*10/100=0.16+1.6=1.76 expense of import country

Before it was 2 gold so the consumer surplus will be=2-1.76=0.24

Total tarrif revenue is10%of 1.6=.0.16

Total increase of producer surplus=10gold-8.16=1.84gold

5.yes,the import country gain in the trade by 0.24

6.targaryen will live after Apri because it has more temperature than. Laninster. At that time and the people will demand more dragonglass to use, so there is no need of export dragonglass in less price.