10. According to the following table, if the US trades 8 bushels of wheat to the UK for 8 yards of cloth, the UK gains from trade equal: A) B) C) D) 3 bushels of wheat 2 yards of cloth 4 yards of cloth 2 bushels of wheat Wheat (bushels/hr) Cloth (yards/hr) U.S. 7 5 U.K. 5 4

10. According to the following table, if the US trades 8 bushels of wheat to the UK for 8 yards of cloth, the UK gains from trade equal: A) B) C) D) 3 bushels of wheat 2 yards of cloth 4 yards of cloth 2 bushels of wheat Wheat (bushels/hr) Cloth (yards/hr) U.S. 7 5 U.K. 5 4

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If Bangladesh is open to international trade in maize without any restrictions, it will import Suppose the Bangladeshi government wants to reduce imports to exactly 20 tons of maize to help domestic producers. A tariff of will achieve this. A tariff set at this level would raise S tons of maize. in revenue for the Bangladeshi government. per ton
4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of maize in Bangladesh. The world price (Pw) of maize is $240 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 440 415 390 365 340 315 290 266 240 190 Domestic Demandi Domestic Supply X P 050 100 160 200 250 300 350 400 450 500 QUANTITY (Tons of maize) ?
1. Consider the following: Canada U.S. Rest of the World (ROW) PxC=$8 PXUS=$5 PxR=$4 (i) Tariff restrictions in effect: Suppose Canada imposes a tariff on its imports of good X. From whom would Canada import? What is the implicit maximum tariff rate so that trade could still exist?
4. Tariff effects: An overview Consider two hypothetical countries, Borzia and Ardon. Both countries produce iDevices, and the price of iDevices is lower in Borzia than in Ardon. If Borzia and Ardon open to trade, producers in Ardon would be more likely to lobby their government for an import tariff on iDevices in order to protect themselves from foreign competition. Which of the following statements about the effects of the tariff compared to free trade are correct? Check all that apply. In Ardon, consumers pay more for the domestic iDevices. In Ardon, some workers at retail and shipping companies that import iDevices lose their jobs. In Ardon, producers of iDevices are willing to expand output. In Borzia, workers in iDevice importing companies lose their jobs. In Ardon, workers in iDevice importing companies see more jobs available to them.
5. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Bangladesh. Bangladesh is open to international trade of maize without any restrictions. The world price (Pw) of maize is $260 per ton and is represented by the horizontal black line. Throughout this problem, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per ton) 500 470 440 410 380 350 320 290 260 230 200 0 + Supply…
29. Which country is exporting cloth? a) Portugal b) England c) Neither d) Both e) Cannot tell
26. What are the implied relative price of wine in international trade? a) 1/3 yard/bottle b) 3 yards/bottle c) 1/2 yard/bottle d) -1/2 yard/bottle e) 2 yards/bottle f) 1/3 bottle/yard g) 2 bottles/yard h) -3 bottles/yard i) 2/3 bottles/yard
QUESTION 28 wine 90 80 70 60 250 Portugal 40 30 20 PPF 10 0 0 10 20 30 40 50 60 cloth CPF wine 28. Which country is exporting wine? a) Portugal b) England c) Neither d) Both e) Cannot tell England 90 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 clot PPF CPF
8. In Poland, one hour of labour can produce 2 tons of coal or 4 bushels of oats. In England, one hour of labour can produce 3 tons of coal or 9 bushels of oats. The trading equilibrium ratio of the price of coal to the price of oats equals 2.2. Which country will experience the largest gains from trade? A) Poland B)England C)Neither, the gains from trade are equal across country D)There is not enough information -- we need to know each country's labour supply
6. Violations of the factor-endowment theory of trade While different natural resources and the theory of comparative advantage can explain many trade patterns, they cannot explain all types of trade that economists observe. Consider each scenario in the following table and determine which theory best explains the trade pattern described. Scenario Since the turn of the century, nearly all X-ray machines purchased by hospitals have been made in Alloway. However, engineers in Osteoville recently designed an X-Ray machine that produces much more accurate results, leading to fewer malpractice cases and more reliable diagnoses. These new X-ray machines quickly become the industry standard. As a result of this, the production of X-ray machines is thriving in Osteoville, while firms in Alloway lose market share and begin trying to develop a new source of advantage. Ice wine is a special spirit that can only be made during a few months in the winter. The nations of Fruzenton and Grappovia are…
8. Suppose that bicycles are made in the United States out of a combination of domestic and foreign parts. a. If a bike sells for $500 but requires $300 of imported parts, what is the domestic value added? b. If a 20 percent tariff is levied on bikes of the same quality and with the same features, how do the price and the domestic value added change? (Assume the United States cannot cause the world price to change.) c. What is the effective rate of protection? d. If in addition to the 20 percent tariff on the final good, a 20 percent tariff on imported parts is also levied, what is the effective rate of protection for U.S. bike manufacturers?
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