Suppose the following table reflects the domestic supply and demand for compact disks (CDs).
Price ($) 15 13 11 9 7 5 3 1
Quantity Supplied 8 7 6 5 4 3 2 1
Quantity demanded 2 4 6 8 10 12 14 1
(a) Graph these market conditions and identify the equilibrium price and sales.
(b) Now suppose that foreigners enter the market, offering to sell an unlimited supply of CDs for $7 apiece. Illustrate and identify (1) the market price, (2) domestic consumption, and (3) domestic production.
(c) If a tariff of $2 per CD is imposed, what will happen to (1) the market price, (2) domestic consumption, and (3) domestic production?