12.The domestic supply and demand curves for hula beans are as follows: Supply:P=50+Q Demand:P=200-2Q where P is the price in cents per pound and Qis the quantity in millions of pounds. The U.s is a small producer in the world hula bean market.where the current price (which will not be affected by anything we e do)is 60 cents per pound. Congress is considering atariffof 40 cents per pound.Find the domestie price o hula beans that will result if the tariff is imposed.Also compute the dollar gain or loss to domestic consumers,domestic producers,and government revenue from the tariff To analyze the influence of a tariff on the domestic hula bean market.start by solvingfor domestic equilibrium price and quantity.First equate supply and demand to determine equilibrium quantity: 50+Q=200.2 Q.Or QEQ=50. Thus,the equilibrium quantity is50 million pounds.Substituting equals 50 into either the supply or demand equation to determine price,we find: Ps=50+50=100 and Ppi=200-(250)=100. The equilibrium price Pis $1(100 cents).However,the worl market prie is 60 cents.At this price,the domestic quantity supplied is 60=50-Qsor Qs=10,and similarly,domestic demand at the world price is 60=200.20m or70.Imports are equal to the differene between domestic demand and supply,or 60 million pounds.If Congress imposes a tariff of 40 cnts the effective price of imports increases to $1.At $1,domestic producers satisfy domestic demand and imports fall to zero. As shown in Figure 9.12.consumer surplus before the imposition of the taiig equal to area a+b+c,o(.)(),900 million centsor 49 million.After the tariff,the price rises to$consumer surplu falls to area a,or (0.5)(200-100)(50)=$25 million,a loss of$24 million.Producer surplus will increase by area b,or (100-60)(10)+(.5)(100-60)(50-10)=$12 million. Finally,because domestic production is equal to domestic demand at $1.no hula beans are imported and the government receives no revenue.The surplus and the incrase in producer surplus isd ad weight loss,which in this case is equal to $12 million.See Figure 9.12 12. The domestic supply and demand curves for hula beans are as follows: Supply: P = 50 + Q Demand: P = 200 - 2Q where P is the price in cents per pound and Q is the quantity in millions of pounds. The U.S. is a small producer in the world hula bean market, where the current price (which will not be affected by anything we do) is 60 cents per pound. Congress is considering a tariff of 40 cents per pound. Find the domestic price of hula beans that will result if the tariff is imposed. Also compute the dollar gain or loss to domestic consumers, domestic producers, and government revenue from the tariff. To analyze the influence of a tariff on the domestic hula bean market, start by solving for domestic equilibrium price and quantity. First, equate supply and demand to determine equilibrium quantity: 50 + Q = 200 - 2Q, or QEQ = 50. Thus, the equilibrium quantity is 50 million pounds. Substituting QEQ equals 50 into either the supply or demand equation to determine price, we find: PS = 50 + 50 = 100 and PD = 200 - (2)(50) = 100. The equilibrium price P is $1 (100 cents). However, the world market price is 60 cents. At this price, the domestic quantity supplied is 60 = 50 - QS , or QS = 10, and similarly, domestic demand at the world price is 60 = 200 - 2QD, or QD = 70. Imports are equal to the difference between domestic demand and supply, or 60 million pounds. If Congress imposes a tariff of 40 cents, the effective price of imports increases to $1. At $1, domestic producers satisfy domestic demand and imports fall to zero. As shown in Figure 9.12, consumer surplus before the imposition of the tariff is equal to area a+b+c, or (0.5)(200 - 60)(70) = 4,900 million cents or $49 million. After the tariff, the price rises to $1.00 and consumer surplus falls to area a, or (0.5)(200 - 100)(50) = $25 million, a loss of $24 million. Producer surplus will increase by area b, or (100-60)(10)+(.5)(100-60)(50-10)=$12 million. Finally, because domestic production is equal to domestic demand at $1, no hula beans are imported and the government receives no revenue. The difference between the loss of consumer surplus and the increase in producer surplus is deadweight loss, which in this case is equal to $12 million. See Figure 9.12