2. Consider a model with two countries, France and Germany. France exports wine to Germany, and Germany exports beer to

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2 Consider A Model With Two Countries France And Germany France Exports Wine To Germany And Germany Exports Beer To 1 (79.33 KiB) Viewed 69 times

2. Consider a model with two countries, France and Germany. France exports wine to Germany, and Germany exports beer to France. In each country, the demand for wine is given by the demand curve Q = 100 - P", where is the quantity demanded and P" is the price of wine. In each country, the demand for beer is given by the same demand curve, i.e., Q° = 100 – PB, where is the quantity demanded and pß is the price of beer. The supply of wine in France is given by QS = 2PW, where Q is the quantity supplied, and the supply of wine in Germany is given by QS = PW The supply of beer in France is given by QⓇ = pk, and the supply of beer in Germany is given by QS = 2P% Suppose the government of France imposes a $10 per unit import tax on beer. Find the world price of beer, the domestic price in France, and the tariff revenue collected by the French government under this policy.