question archive 2 Tariff and Antidumping Duty with Foreign Monopoly Demand for iPads in Home country is characterized by the following demand function: Q = 12 − p
2 Tariff and Antidumping Duty with Foreign Monopoly Demand for iPads in Home country is characterized by the following demand function: Q = 12 − p
Subject:EconomicsPrice: Bought3
2 Tariff and Antidumping Duty with Foreign Monopoly Demand for iPads in Home country is characterized by the following demand function: Q = 12 − p. The only supplier of iPads is Apple, a foreign monopoly with a constant marginal cost equal to 4. Hint: If a monopolist faces a demand curve Q = A − Bp (where A and B are constants) then its marginal revenue is MR = A B − 2 B Q. (a) What price would Apple charge Home consumers under free trade? How many iPads would the Home country import? (b) Suppose Home government imposes a tariff t = 2 per iPad. (i) How much would Home consumers now pay for iPads? How many would be purchased? (ii) By how much would Home welfare increase or decrease due to the tariff? (c) Suppose that instead of a tariff, Home government threatens to impose an antidumping duty on Apple (because it noticed that iPads are sold at a higher price in Foreign). In response to the threat Apple voluntarily raises its price to consumers by 2 (relative to the price it charges under free trade). (i) By how much would Home welfare increase or decrease due to the antidumping duty threat? (d) Which policy leaves Home better off: a tariff or an antidumping duty?
