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Question: suppose we have the following demand and supply functions taken...

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Suppose we have the following demand and supply functions (taken from Ass HOME Demand P 100- 2Q Suppl PhQ FOREIGN Demand P 2002Q Supply P Q2: Two-country model with EXPORT TARIFFS: use the functions above. Suppose the exporter imposes an export tax of S2 per unit. Calculate the new equilibrium world price. What are the tariff-ridden domestic prices? (2 points) a) Find the change in Consumer and Producer Surplus in each country. Recall that export tariffs need to be included in social surplus (EG: SS- CS +PS+ revenue) (2 points) b) (1 points) Does the importer gain from the tariff. Does the exporter? Show and explain fully. Contrast with the importers tariff. c) (5 points) d) Find the exporters optimal tariff. Show your work.

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