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12 Assume that there are two countries, Home and Foreign. Home's demand curve for manufactured...

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Accounting

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12 Assume that there are two countries, Home and Foreign. Home's demand curve for manufactured goods is D=240 3P where P denotes the price of manufactured goods. Home's supply curve is S= -40+2P. Foreign's export supply curve is XS = -100+5P. a) Derive Home's import demand curve (MD). (2 pts) b) Assume Foreign and Home trade with each other at zero transportation cost. What is the world market price? What is the import volume? Provide some intermediate steps of calculation. (4 pts) C) Assume now that Home introduces an import tariff (per unit) t = 5. Calculate (1) the external market price PT i.e., Foreign's export price, and (ii) the internal market price PT, i.e., the price Home's consumers have to pay (4 pts)

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