The demand for DVD players in a country is given by D = 300 - 0.2P,where P is the price of a DVD player.Supply by domestic producers is given by S = 100 + 0.8P.The world price of a DVD player equals $100 and this economy is open to trade.If a tariff of $50 per unit is placed on DVD player imports,the quantity of DVD players produced domestically will change from __________ with no tariff to __________ with the tariff.

Question

Quizplus · Accepted Answer

Without the tariff, the domestic supply at the world price of $100 is S = 100 + 0.8(100) = 180. With a $50 tariff, the effective price becomes $150, so the domestic supply is S = 100 + 0.8(150) = 220.

The Demand for DVD Players in a Country Is Given