Evaluate the change in deadweight loss

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Reference no: EM13151105

Question)

Suppose the market for semiconductors in the U.S. is characterized by:

Q_d = 200 - 40P [Demand]

Q_s = 40+ 40P [Supply]

The market for semiconductors in the rest of the world is characterized by:

Q_d = 160 - 40P [Demand]

Q_s = 80 + 40P [Supply]

Suppose the U.S. government imposes a quota of 24 million units on its imports of semiconductors.

Calculate the magnitude of the deadweight loss resulting from the quota under the assumption that the U.S. is a small open economy.

Question 2)Suppose the market for wine in the U.S. is characterized by:Q_d = 200 - 40P [Demand] Q_s = 40 + 40P [Supply]

The market for wine in the rest of the world is characterized by:

Q_d = 160 - 40P [Demand]

Q_s = 80 + 40P [Supply]

Calculate the change in deadweight loss if the U.S. replaces a prohibitive tariff per unit on imported wine by an equal production subsidy per unit of wine sold by U.S. producers.

Reference no: EM13151105

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