Calculate change in deadweight loss if us replaces tariff

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Suppose the market for wine in the U.S. is characterized by:
Qd = 100 - 20P [Demand]
Qs = 20 + 20P [Supply]
The market for wine in the rest of the world is characterized by:
Qd = 80 - 20P [Demand]
Qs = 40 + 20P [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. [Note: P = price per unit; Qd = billions of units demanded; Qs = billions of units supplied]

Reference no: EM13245919

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