Questions: Consider Figure Q-7-1. Assume that Sx and Dx are the respective demand and supply of Good X in Nation 2. Assume that Nation 1 is a large economy that can supply any amount of Good X to Nation 2, that the world price of Good X is p=2, and that Nation 2 imposes a tariff that raises the price of Good X to p=3. At this higher price, the quantity of Good X supplied by domestic producers changes from 20 units to unit(s).

To solve this problem, we need to understand the impact of a tariff on the domestic supply of Good $X$ in Nation 2. The question provides the following information:

• Nation 1 is a large economy that can supply any amount of Good $X$ to Nation 2.
• The world price of Good $X$ is $p=2$.
• Nation 2 imposes a tariff that raises the price of Good $X$ to $p=3$.
• At the higher price of $p=3$, we need to determine the change in the quantity of Good $X$ supplied by domestic producers in Nation 2.

To find the change in the quantity supplied by domestic producers, we need to consider the supply curve (Sx) of Good $X$ in Nation 2. The supply curve typically shows the relationship between the price of a good and the quantity supplied. As the price increases, the quantity supplied by domestic producers generally increases, assuming other factors remain constant.

Given that the price increases from $p=2$ to $p=3$ due to the tariff, domestic producers in Nation 2 are likely to supply more of Good $X$. The question states that at the higher price of $p=3$, the quantity supplied by domestic producers changes from 20 units to a certain number of units.

Without the specific supply curve or additional data points, we cannot determine the exact new quantity supplied. However, the problem implies that the quantity supplied will increase from 20 units due to the higher price. The exact new quantity would depend on the slope of the supply curve, which is not provided in the question.

In summary, the quantity of Good $X$ supplied by domestic producers in Nation 2 will increase from 20 units at the higher price of $p=3$, but the exact new quantity cannot be determined without additional information about the supply curve.