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Given Qd= 1000 - p and Qs = 3p -120, suppose the free trade (world) price is $120.
a. Solve for the amount imported, consumer surplus, and producer surplus.
b. Suppose a per unit tariff of $64 is imposed by the government. Solve for the consumer surplus, producer surplus, government revenue and total surplus with the tariff.
c. Solve for the change in consumer surplus, the change in producer surplus, the change in government revenue and change in total surplus (i.e. the deadweight loss) from the free trade case (without the tariff). [To do this, make the calculations using your answers in 3a, and calculate total surplus under free trade].
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