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 $20. Suppose that the world price of meekies is $23. 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 meekies. Given current economic conditions in Meekerton, complete the following table by indicating whether each of the statements is true or false. Statement True False Meekertonian producers are worse off under free trade than they were before. о Meekertonian consumers were worse off without free trade than they are with it. 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. True False

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 $20. Suppose that the world price of meekies is $23. 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 meekies. Given current economic conditions in Meekerton, complete the following table by indicating whether each of the statements is true or false. Statement True False Meekertonian producers are worse off under free trade than they were before. о Meekertonian consumers were worse off without free trade than they are with it. 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. True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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mouzitive Assignments The graph below depicts the impact of a tariff in the market for shoes. If a nation initially participates in free trade and enjoys a price of $100 per pair of shoes, then a 20% shoe tariff would reduce the welfare of domestic consumers by the total of areas A, B, PS, and T. Of these areas representing a loss to domestic consumers, click on the area(s) that would become a gain to foreign producers if the tariff were replaced with a quota for the same quantity of imports. Tariff Price Po $140 P $120 P $100- InQuizitive for Principles of Macroeconomics PS Click or tap the appropriate place in the image. Qoz Imports with a tariff Q₁ Imports without Qw Soomestic only Swith tri Domestic Sree trade Quantity (shoes)
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The US decides to impose a tariff on Avocados of $0.75 each Under Free Trade you have the following information: $1 per Unit World and US Price: Domestic Consumption 25 Billion Units 1 Billion Units Domestic Production: Under a Tariff you have the following information: New US Price: $1.75 per Unit Domestic Consumption: Domestic Production: 21 Billion Units 5 Billion Units (a) How much does the government gain in tariff revenue? (b) How much do domestic producers gain? (c) How much do consumers lose? (d) What is net national or "dead weight" loss?
Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of meekers is $30. Suppose that the world price of meekers is $40. Assume that Meekertown is too small to influence the world price of meekers once it enters the international market. Drop down options import or export.
a. Table 1 represents the demand and supply schedules of medicinal products for Belgium, a small nation that is unable to affect the world price. i. Draw the demand and supply schedules of medicinal products for Belgium [preferable on the graph paper provided]. ii. Suppose that Ireland and Germany can supply medicinal products to Belgium at a price of €10 and €15 per pack, respectively. Under free trade, which nation exports medicinal products to Belgium? How many medicinal products does Belgium consume, produce, and import? iii. Assume that Belgium imposes a 100 percent nondiscriminatory ad valorem tariff on its medicinal products imports. Which nation exports medicinal products to Belgium? How many medicinal products will Belgium consume, produce, and import? iv. Assume now that Belgium forms a customs union with Germany. Is the customs union that belgium forms with Germany trade creating, trade diverting, or neither? Provide a reason for your choice of answer. What is the Euro value…
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.