How much is the price in the domestic market

Reference no: EM13199963

Use the following equations to answer the questions below.

Demand: Q = 1100 - 5P
Domestic Supply: Q = -100 + P

from this, equilibrium leads to 1100-5P = -100+P ⇒ P = 200 and Q = 100
Suppose the world price is still 120. Assume that the government now imposes an import quota of 300 units. Under the new quota, how much is the price in the domestic market?

Reference no: EM13199963

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