Determine the equilibrium price and quantity and graph your supply and demand curves.

The nation of Panama is a small open economy that is unable to affect world prices. It imports peanu Show more The nation of Panama is a small open economy that is unable to affect world prices. It imports peanuts at the price of $10 per bag. The demand and supply equations for peanuts in Panama are given by the following equations: (Demand equation): Q=400-10P (Supply equation): Q=50+5P a. Determine the equilibrium price and quantity and graph your supply and demand curves. (Make sure to determine correctly the vertical intercepts for the demand and supply curves) b. Suppose the government of Panama imposes a quota limit of 50 bags: i. Calculate the price of peanuts after the quota is imposed ii. By comparing the free trade price of peanuts with price of peanuts after the imposition of the quota limit calculate the change in producer surplus. iii. By comparing the free trade price of peanuts with the price of peanuts after the imposition of the quota limit calculate the change in consumer surplus. iv. Calculate the quota rents iv. Assuming that all the quota rents will all accrue to the government of Panama in terms of revenues from issuing the import quota licenses calculate the overall net welfare change after the import quota is imposed. Show less

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Approximately 250 words