Calculate deadweight loss if us imposes a tariff

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Reference no: EM1369625

Q. Suppose demand and supply for wine within U.S. is:
Qd = 100 - 20P [U.S. demand curve]
Qs = 20 + 20P [U.S. supply curve]

Suppose demand and supply for wine in rest of world (R.O.W.) is:
Qd = 80 - 20P [R.O.W. demand curve]
Qs = 40 + 20P [R.O.W. supply curve]

Calculate deadweight loss if U.S. imposes a tariff of 25 cents per bottle of imported wine.

Reference no: EM1369625

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