Demand and supply for television use (pay per view) by choice is described by the following demand and supply functions (v represents the price per item)
Demand = 198 - 2v
Supply = -2 + 2v
The world market price for TV use is € 30. Price per item.
The decision is now made to impose a 30% duty on the world market price of imports (foreign streaming services), but the government has now found that traditional duty can be collected through credit card companies' transactions (no VAT).
i) What will be the price, imports, demand, and domestic supply.
ii) What will be the macroeconomic loss due to duty compared to free trade without VAT?
