4. A graphical comparison of tariffs and quotasBorzia and Ardon are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 20million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $3,000. In Borzia, the government decides toimpose a tariff of $2,000 per television; in Ardon, the government implements a quota of 20 million televisions.Assume that Borzia and Ardon have identical domestic demand (Do) and supply (S) curves for televisions as shown on the following graph. Underthese conditions, the price of televisions is $5,000 per television in each country.PRICE (Dollars per television)1000090008000700060005000400030002000100000PW10Do_020 30 40 50 60 70QUANTITY (Millions of televisions)8090S100 Suppose that in both countries, demand for televisions rises from Do to D₁.Assuming Borzia keeps the tariff at $2,000 per television, complete the first row of the following table by calculating each of the values given thisincrease in demand. Assuming Ardon maintains a quota of 20 million televisions, complete the second row of the table by calculating each of thevalues given this increase in demand.CountryBorzia (tariff = $2,000)Ardon (quotaTrue20 million televisions)O FalsePrice(Dollars)True or False: The increase in demand helps domestic producers but hurts domestic consumers in Ardon.Quantity Demanded at New Price(Millions of televisions)Which of the following explain why a tariff is aImports(Millions of televisions)restrictive trade barrier than an equivalent quota. Check all that apply.An exporter can try to cut costs or slash profit margins.Importers who are able to pay the tariff duty will get the product.A tariff prevents domestic consumers from buying imports even if they are willing to pay a higher price.

4. A graphical comparison of tariffs and quotas Borzia and Ardon are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $3,000. In Borzia, the government decides to impose a tariff of $2,000 per television; in Ardon, the government implements a quota of 20 million televisions. Assume that Borzia and Ardon have identical domestic demand (Do) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $5,000 per television in each country. PRICE (Dollars per television) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 PW 0 10 Do D₁ ☆ 20 30 40 50 60 70 80 QUANTITY (Millions of televisions) S 90 100 ?

4. A graphical comparison of tariffs and quotas Borzia and Ardon are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $3,000. In Borzia, the government decides to impose a tariff of $2,000 per television; in Ardon, the government implements a quota of 20 million televisions. Assume that Borzia and Ardon have identical domestic demand (Do) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $5,000 per television in each country. PRICE (Dollars per television) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 PW 0 10 Do D₁ ☆ 20 30 40 50 60 70 80 QUANTITY (Millions of televisions) S 90 100 ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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