Question

The domestic supply and demand curves for hula beans are as follows: P = 50 + Q (supply) and P = 200 – Q (demand) where P is the price in cents per pound and Q is the quantity in millions of pounds. Ireland is a small producer in this market where the current price is 60 cents per pound. The Irish Government is considering a tariff of 40 cents per pound. The quantity of hula beans imported into Ireland after the tariff is

Answer 1

Answer:

Margin of surplus = 1,200

Explanation:

Given:

Supply P = 50 + Q

Demand P = 200 – Q

Current price = 60 cents per pound

Considering a tariff = 40 cents per pound

Computation:

Producers surplus = [10 x 10] / 2

Producers surplus = [100] / 2

Producers surplus = 50

So,

New producers surplus = [50 x 50] / 2

New producers surplus = 1,250

Margin of surplus = 1,250 - 50

Margin of surplus = 1,200