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Demand is given by: Qd = 6000 - 50P, Domestic supply is: Qs = 2*P, and Foreign producers can supply any quantity at a price of $40. Calculate each the following:
a. If foreign producers cannot sell in the domestic market, what is the equilibrium price? Quantity? Revenue?
b. If foreign producers can sell in the domestic market, what is the equilibrium price? What is the equilibrium quantity? How much is sold by domestic and foreign producers, respectively? What is the revenue for domestic and foreign producers, respectively?
c. Under domestic government pressure, foreign producers voluntarily agree to restrict their goods. Relative to (b): What will happen to the price and quantity? What will happen to the amount that domestic producers supply? What will happen to revenues of domestic and foreign producers?
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Elucidate how is the tax burden split between buyer also seller.
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