Answer ALL questions, show ALL work and ALL graphs and their modifications The t
ID: 1198178 • Letter: A
Question
Answer ALL questions, show ALL work and ALL graphs and their modifications
The table below illustrates the demand and Supply schedules for watches in Spain in, a "small" nation that is unable to affect world prices.
Note: Quantity in thousands
1. Sketch Spain's demand and Supply schedules of watches. What are the equilibrium price and quantity? Calculate the value of Spanish consumer surplus and producer surplus.
2. Suppose Spain's imports watches at a price of $100 each (free trade price). Under free trade how many watches does Spain produce, consume, and import? Determine Spain's consumer surplus, and producer surplus.
3. To protect producers from foreign competition, suppose that Spain imposes a quota that limits imports to 100 watches. Determine the quota-induced price increase and the resulting decrease in consumer surplus. Calucate the quata's redistributive effect and the quota-rent.
4. Re-sketch Spain's demand ans supply schedules of watches. Assume that Spanish goverment grants its import-competing manufacters a production subsidy of $100 per watch. After the subsidy is granted,
a. What is the total import of Spanish imports?
b. What is the cost of the production subsidy to the Spanish government?
c. What is the increase in Spanish producer surplus under the production subsidy?
d. What is the overall welfare loss for Spain?
Price of watches quantity supplied quantity demanded 50 100 600 100 200 500 150 300 400 200 400 300 250 500 200 300 600 100Explanation / Answer
Answer ALL questions, show ALL work and ALL graphs and their modifications The t