how to calculate the domestic price of a good. given the world price, tariff, supply, demand and elasticity of demand.

Question

Need help answering this question asap. 

Answer 1

If the country is a price taker on the world market. Consumer will feel the full brunt of the Tariff. The old Price Was P the New Price is Now P+T. Quantity demanded wil fall by Demand elasticity * (T/P The quantity supplied domestically will rise by The Elasticity of supply*(T/P)

Answer 2

Stacey: In simple terms the domestic price of a good will be effected as follows by the variables that you have identified

Domestic Price of Good ----- World Price -- Will follow the movement in the world price

                                  -----  Tariffs --- In general Tariffs are put on goods to raise the price of imported goods compared to those of the domestically produced goods.

                                  -----  Supply and Demand --  The DPG will follow the normal ups and downs of increases in supply and demand.

There was an excellent working paper called Factors Affecting Domestic Price Differentials in the Petroleum Products by Kunihiro Ohishi. It is very detailed and gives you an idea of how complicated the answer to your question can be,