A small country’s demand curve is given by Q=36-2P and its supply curve is given by Q=4P-12. Assume the world is currently in free trade and that the price under free trade is $4. What is the size of the import quota that, when introduced, would be equivalent (i.e. have the same impact on price and quantity) to the introduction of a $2 specific import tariff? Group of answer choices 35 26 12 13

To solve this problem, we first need to find the quantity demanded and supplied at the free trade price of $4.

The demand curve is given by Q = 36 - 2P. Substituting P = 4, we get Q = 36 - 2*4 = 28. So, the quantity demanded at the free trade price is 28.

The supply curve is given by Q = 4P - 12. Substituting P = 4, we get Q = 4*4 - 12 = 4. So, the quantity supplied at the free trade price is 4.

The difference between the quantity demanded and supplied is the quantity imported, which is 28 - 4 = 24.

Now, let's find the quantity demanded and supplied at the tariff-inclusive price of $6 (original price of$4 plus the tariff of $2).

Substituting P = 6 in the demand curve, we get Q = 36 - 2*6 = 24. So, the quantity demanded at the tariff-inclusive price is 24.

Substituting P = 6 in the supply curve, we get Q = 4*6 - 12 = 12. So, the quantity supplied at the tariff-inclusive price is 12.

The difference between the quantity demanded and supplied is the quantity imported with the tariff, which is 24 - 12 = 12.

So, the size of the import quota that would have the same impact as the introduction of a $2 specific import tariff is 12. Therefore, the correct answer is 12.