How large is the domestic producer surplus

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Question: Melt-blown cloth is traded in a competitive world market. It is imported into China at a world price of 8 hundred (RMB) per kg. The domestic supply curve is given by QD = 60 - 2P and the domestic demand curve is given by Qs = =P in China. Answer the following questions about the Chinese market:

a. When there is no trade restriction, what will be the quantity of importation? And how large is the consumer surplus and how large is the domestic producer surplus?

b. The Chinese government decides to impose a tariff of 4 hundred (RMB) per kg, what will be the Chinese price and level of imports? Please depict the deadweight loss in a graph and calculate how large is the deadweight loss.

Reference no: EM133340773

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