3. Question 3 A country, called 'Bikyland', does not allow for international trade. Bikyland produces motorbikes for her own consumption. At the equilibrium without international trade, the domestic price (Pdom) is $2000 per motorbike and the quantity (Qdom) is 5 million motorbikes. Then, Bikyland opens up her motorbike market for trade and finds that the world price (Pw) is $2500 per motorbike. Domestic supply (Qsdom) rises to 6 million and domestic demand (QDdom) falls to 4 million motorbikes. 3.1 Draw a graph of the motorbike market with SC, DC, Pdom Qdom Pw, Qsdom and Qpdom Your graph should show all the numbers. 3.2 At the equilibrium without trade, calculate the revenue that producers/suppliers receive. 3.3 What is the domestic price of motorbikes after international trade is allowed? Will Bikyland become an importer or an exporter? Give a reason for your answer. 31 Des joining international trado lead to a shortage or surplus of supply? What the amount

3. Question 3 A country, called 'Bikyland', does not allow for international trade. Bikyland produces motorbikes for her own consumption. At the equilibrium without international trade, the domestic price (Pdom) is $2000 per motorbike and the quantity (Qdom) is 5 million motorbikes. Then, Bikyland opens up her motorbike market for trade and finds that the world price (Pw) is $2500 per motorbike. Domestic supply (Qsdom) rises to 6 million and domestic demand (QDdom) falls to 4 million motorbikes. 3.1 Draw a graph of the motorbike market with SC, DC, Pdom Qdom Pw, Qsdom and Qpdom Your graph should show all the numbers. 3.2 At the equilibrium without trade, calculate the revenue that producers/suppliers receive. 3.3 What is the domestic price of motorbikes after international trade is allowed? Will Bikyland become an importer or an exporter? Give a reason for your answer. 31 Des joining international trado lead to a shortage or surplus of supply? What the amount

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What are the advantages of trade? Explain how trade impacts U.S. consumers, U.S. producers, importing or exporting firms? What happens when nations impose barriers to trade (also give examples of these barriers)?
If the U.S. did not trade what price would the good cost? If the world price was $200 what quantity would the U.S. produce? What quantity would be imported. What is consumer surplus at the world price? Producer surplus at the world price? Who benefits from the free trade and who gets hurt If the U.S. government puts a tariff on the good so now the price is $300 who benefits, who is hurt? What quantity will U.S. producers now produce? What happens to consumer surplus from $200 to $300? What does producer surplus do with the price going from $200 to $300? What does the government gain with the tariff? Who benefits from free trade overall? Who benefits from trade restrictions? Why is a tariff the most used trade restriction?
The United States has historically imposed import tariffs on goods that include tobacco, canned tuna, steel, and aluminum. Suppose the market for tobacco is illustrated by the accompanying graph. a. As shown, the world price is $2 per pound. Suppose the U.S. imposes a tariff of $1 per pound. Adjust the price line labeled "World price with tariff" (at the top of the graph) to reflect this tariff. b. Use the letters and values in the graph to fill in the following table. Without tariff With import tariff Price Quantity demanded Quantity supplied Domestic consumer surplus Domestic producer surplus Government revenue Total economic surplus c. If the government decides to replace the tariff with a quota that will have the same effect on the market as the tariff, the quota should restrict imports to____________________( 1million pounds, 2 million…
a. Consider a closed economy (an autarky). The equilibrium price of computers in this autarky is equal to $1,000. Suppose that the world price of computers is equal to $800. Does this country have comparative advantage in producing computers? If this autarky opens up to international trade, will this country export or import computers? b. Show the consumer surplus, producer surplus, equilibrium price and quantity traded for the closed economy in part-a in the market for computers.
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2. Welfare effects of a tariff in a small country Suppose Guatemala is open to free trade in the world market for oranges. Since Guatemala is small relative to the international market, the demand for and supply of oranges in Guatemala have no impact on the world price. The following graph shows the domestic market for oranges in Guatemala. The world price of a ton of oranges is Pw = $350. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 710 Domestic Demand Domestic Supply 670 630 590 550 510 470 430 28 8 8 8 8 8 8 8 390 350 P. 310 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Tons of oranges) CS PS Because Guatemala participates in international trade in the market for oranges, it will import tons of oranges. Now suppose the Guatemalan…
3. Welfare effects of a tariff in a small country Suppose Ronduras is open to free trade in the world market for soybeans. Because of Honduras's small size, the demand for and supply of soybeans in Honduras do not affect the world price. The following graph shows the domestic soybeans market in Honduras. The world price of soybeans is Pw = $400 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). 1200 Domestic Demand Domestic Supply 1100 CS 1000 900 PS 800 700 600 500 400 300 200 100 120 140 160 180 200 20 40 60 80 QUANTITY (Tons of soybeans) PRICE (Dollars pe: ton)
The following table is domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. Quantity supplied (domestic) 12 10 Multiple Choice 7 4 4 units and 7 units. 4 units and 6 units. Refer to the above data. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be: 1 unit and 15 units. Price 7 units and 0 units. $5 41 3 2 Quantity demanded (domestic) 7 11 16
Plz give the explanation
Suppose there are three countries in the world: Portlandia, Sanaton, and Volcania. These three countries produce a total of 3 different kinds of goods: Raspberries, Pomegranates, and Grapefruits. If Portlandia imposes some protectionist measures on Raspberries from Sanaton, and Volcania. OThe price of Raspberries in Portlandia will increase for everyone OThe Raspberries industry in Volcania will benefit OThe Raspberries in Sanaton will be the only one to see higher prices for this product
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