equilibrium price & quantity under free trade
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If my firm operates in a competitive market and competes with many other domestic and foreign firms.
The domestic market demand for the product you produce is Qd = 500 - 1.5P.
The domestic market supply curve is Qsd = 50 + 0.5P, and the market supply curve for the foreign firms in the market is Qsf = 250.
- Determine the equilibrium price and equilibrium quantity under free trade.
- Determine the equilibrium price and equilibrium quantity when foreign suppliers are limited to a 100 unit quota imposed by the U.S. government to protect domestic suppliers.
- Are domestic producers better or worse off after the quota? Why
- Are domestic consumers better or worse off after the quota? Why
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Solution Summary
Equilibrium prices & quotas are analyzed.
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