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The domestic demand function for portable radios is given by Q=5,000-100P, where price (p) is measured in dollars and quantity is measured in thousands of radios per year. The domestic supply curve for radios is given by Q=150P. Suppose portable radios can be imported at a world rpice of $10 per radio.
a) If trade were completely free, how many radios would be imported?
b) The government imposed a $5 tariff on portable radios. How would this atriff change the market equilibrium? How many radios would be imported?
c) What is the change in net producer's surplus resulting fromthis tariff?
d) what is the change in net consumer's surplus resulting from this tariff?
e) What is the deadweight loss resulting from this tariff?
f) Instead of imposinga tariff, the government reached an agreement with foreign suppliers to "voluntarily" limit the portable radios they export to 1,250 per year. What is the deadweight loss resulting from this agreement?
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