2. Consider the following demand and supply functions for wine for Italy and Spain.D'180 – 20P'DS80 – 10PSSI-20 + 10P!-20 + 20PSa) Calulate (i) the equilibrium world price when both countries are OPEN to trade; (ii)quantity exported and imported by each country; (iii) The TOTAL welfare of theimporting country.Give exact numbers.b) The importing country introduces a tariff of €2. Calculate (i) the new price in theimporting country; (ii) the new free trade price; (iii) the Total welfare of the importingcountry; (iv) the effect on the welfare of the importing country in comparison withyour previous answer. Give exact numbers.

Hi, thanks for the question. As per the guidelines, we are allowed to attempt first three questions.…

Answered: 2. Consider the following demand and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The figure below shows the hypothetical domestic supply and demand for baseball caps in the country of Spain. Domestic Supply and Demand for Baseball Caps Spain 10 9. 8. 7 3 2 1 Da 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps consumers are indifferent between domestic and imported baseball caps. €3 and there are no import restrictions on this product. Assume that Spanish Instructions: Enter your answers as whole numbers. a. What quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand b. What quantity of baseball caps will be imported? thousand Now suppose a tariff of €2 is levied against each imported baseball cap. C. After the tariff is implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand d. After the tariff is implemented, what quantity of baseball caps will be imported? thousand Price (€ per cap)
Consider the market for coffee in the small, isolated country of Krakozhia. Within Krakozhia, the domestic demand for coffee is: Q = 500-2p and the domestic supply of coffee is: Q* = -150+ 3p
2. Winners and losers from free trade Consider the imaginary economy of Meekerton and the market for meekies, a hypothetical good. Without international trade the domestic price of meekies is $38. Suppose that the world price of meekies is $36. Assume that if it were to enter the international market for meekies, Meekerton is too small to influence the world price. If Meekerton decides to participate in free trade, then it will Given current economic conditions in Meekerton, complete the following table by indicating whether each of the statements is true or false. Statement meekies. Meekertonian producers were worse off without free trade than they are with it. Meekertonian consumers were better off without free trade than they are with it. True False True True or False: When a nation is too small to affect world prices, allowing free trade will sometimes decrease total surplus in that country, regardless of whether it imports or exports as a result of international trade. False
12. If the free trade price is lIP and this country imposes a trade tariff of $3, what will be the resulting net welfare loss to the economy? a)$3 b)$27 C)$13.5 d)$40.5 e)$9 13. if the free trade price is IP and this country imposes an import quota of 6 units, what will be the welfare loss to this economy? a)$3 b)$27 c)$13.5 d)$40.5 e)$18
2. Winners and losers from free trade Consider the imaginary economy of Meekerton and the market for meekies, a hypothetical good. Without international trade the domestic price of meekies is $25. Suppose that the world price of meekies is $28. Assume that if it were to enter the international market for meekies, Meekerton is too small to influence the world price. If Meekerton decides to participate in free trade, then it will export meekies. Given current economic conditions in Meekerton, complete the following table by indicating whether each of the statements is true or false. Statement Meekertonian producers were better off without free trade than they are with it. Meekertonian consumers are better off under free trade than they were before. O True o False True False True or False: When a nation is too small to affect world prices, allowing free trade will sometimes decrease total surplus in that country, regardless of whether it imports or exports as a result of international…
Price $16 129 14 12 10 8 co 6 4 2 Sd 0 10 20 30 40 50 60 70 80 90 Quantity Dd Please refer to the graph provided, which displays the domestic supply (S) and demand (D) curves for a certain product. The world price of this product is $6. If this particular market is open to international trade, but there is a tariff of $6 per unit imposed, then the domestic producers will earn $240, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $40 $600, and there will be no imports and no tariff revenue. $120, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $80 O $400, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $40
Consider a world with two countries - USA and Foreign and a competitive market of sugar in both countries. Foreign is more effecient in the production of sugar and in a free trade equilibrium, US would import part of its consumption of sugar. Describe graphically such trading equilibrium of sugar. What would be the effect on the sugar price in USA and on the welfare (measured by consumer surplus, pro- ducer surplus and tari§ revenue) of US when US imposes an import tariffs on sugar? Argue using a graph taking into consideration that US is a large sugar importing country.
Figure 9-1 PRICE (Dollars per unt of coffee) 70 8 50 10 с B P Uganda TI/ 9 D Domestic Supply 15 QUANTITY (Units of coffee) Domestic Demand World Price 20 Refer to Figure 9-1. From the figure it is apparent that Uganda will export coffee if trade is allowed. Uganda will import coffee if trade is allowed. Uganda has nothing to gain either by importing or exporting coffee. O the world price will fall if Uganda begins to allow its citizens to trade with other countries.

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