6. The arguments for restricting trade Suppose there is a policy proposal to increase trade restrictions on imported microprocessors to the United States. Read the following scenario and answer the question that follows. A congresswoman from a state with several microprocessor factories argues that the government should impose a tariff on microprocessors because they are a necessary input into the production of various weapons. Free trade, she contends, would make the United States overly dependent on foreign countries for the supply of microprocessors and thus, in case of war, unable to make enough weapons to defend itself. Which of the following justifications is the congresswoman using to support their argument in favor of the trade restriction on microprocessors? OUsing-protection-as-a-bargaining-chip argument O National-security argument O Jobs argument O Unfair-competition argument Infant-industry argument

6. The arguments for restricting trade Suppose there is a policy proposal to increase trade restrictions on imported microprocessors to the United States. Read the following scenario and answer the question that follows. A congresswoman from a state with several microprocessor factories argues that the government should impose a tariff on microprocessors because they are a necessary input into the production of various weapons. Free trade, she contends, would make the United States overly dependent on foreign countries for the supply of microprocessors and thus, in case of war, unable to make enough weapons to defend itself. Which of the following justifications is the congresswoman using to support their argument in favor of the trade restriction on microprocessors? OUsing-protection-as-a-bargaining-chip argument O National-security argument O Jobs argument O Unfair-competition argument Infant-industry argument

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. The arguments for restricting trade Suppose there is a policy proposal to increase trade restrictions on imported microprocessors to the United States. Read the following scenario and answer the question that follows. The president of the United States argues that the United States should threaten to impose a tariff on Chinese microprocessors in order to induce the Chinese to remove its tariff on American cars. Which of the following justifications is the president using to support their argument in favor of the trade restriction on microprocessors? Unfair-competition argument Infant-industry argument Jobs argument Using-protection-as-a-bargaining-chip argument National-security argument
QUESTION 4 In the graph below, the quantity of imports before and after imposing a $2 tariff would be Domestic Supply $10 $8 $6 0 0 0 0 с 50, 40 50, 20 40, 30 30, 10 30, 20 DEFO 20 30 & 9 World P Domestic D Q (millions of towels) QUESTION 5 If Mexico subsidizes its textiles, making it impossible for U.S. producers to compete, the appropriate response is for the U.S. to enact an equal subsidy so that there is a level playing field of competition in text U.S. economic well-being would be maximized by purchasing subsidized textiles from Mexico. a tariff on textiles would improve economic well-being in the U.S. None of the above is a true statement. the appropriate response is to threaten to retaliate with an equal subsidy and enact it if the Mexicans do not reduce their sub
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How does the tariff affect (i) the consumer surplus, (ii) the producer surplus, and (iii) government's revenue on the market where the import tariff is applied? Briefly explain your result. Assume a country that is small and does not affect the world market implements an import tariff. How does the tariff affect the overall welfare of the country?
The graphs below show domestic supply and demand curves for a good in two countries, with prices measured in the same currency. If these are the only two countries in the world and if they open to free international trade, O. Demanders of the good in Country A will benefit from trade. O. Suppliers of the good in Country A will benefit from trade. O. The welfare of Country A as a whole will fall. O. The quantity of the good demanded in Country B will become larger. O. The price of the good in both countries will be the one labeled PB.
The U.S. is an importer of ethanol, and let’s assume they are a price-taker in the world market. Suppose that a technological advance in ethanol production in Brazil, the world’s largest exporter, drives down the world price of ethanol by $5. Draw a graph and explain how this change in world price affects consumer surplus, producer surplus, and total surplus in the U.S. market. Now suppose the U.S. government institutes an import tariff of $5 in response to the fall in the world price. On your graph label the revenue raised by the tariff and the deadweight loss created (if it exists). Who is likely to support this policy? Suppose that the fall in price is attributable not to a technological advance but to a subsidy from the Brazilian government to Brazilian ethanol producers. How would this affect your analysis?
4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of limes in Guatemala. The world price (Pw) of limes is $790 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 limes and that there are no transportation or transaction costs associated with international trade in limes. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 1110 1070 1030 990 950 910 870 830 790 750 710 0 Domestic Demand 40 25 1 1 80 Domestic Supply 120 160 200 240 280 QUANTITY (Tons of limes) I 1 Pw 320 380 400 (?)
4. Tariffs Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw =$250 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). 490 Domestic Demand Domestic Supply 460 CS 430 400 370 PS 340 310 280 250 220 190 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of tons of wheat) If Kenya allows international trade in the market for wheat, it will import tons of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported ton of wheat. After the tariff, the price Kenyan consumers pay for a ton of wheat is $ and Kenya will import tons…
4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of oranges in Honduras. The world price (Pw) of oranges is $535 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 oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Domestic Demand 775 735 X 695 655 615 535 + 895 PRICE (Dollars per ton) 855 815 575 495 Domestic Supply 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of oranges) PW A tariff set at this level would raise ? If Honduras is open to international trade in oranges without any restrictions, it will import Suppose the Honduran government wants to reduce…
Given the information as follows: Consider the following model of trade between Vietnam and France. Assume throughout that those two countries are the only two countries in the world, at least for purposes of trade. There are two goods: Rice and Beef. Consumers always spend 1/4 of their income on rice and the remainder on beef. The only factor of production is labor. Each Vietnamese worker can produce 2 unit of Rice or 1 unit of beef per unit of time, while each French worker can produce 1 units of rice or 3 units of beef per unit of time. There are 100 million workers in Vietnam and 70 million in France. a. Determine the product brings higher wealth to each country. b. Determine the pattern of trade for both countries using Ricardian model. Draw the world relative supply curve. c. What is the benefit of each country when joining international trade following Ricardian model? Draw the graph to clarify your idea.
Tricky question. Consider the diagram below, depicting the United States Market for Airplanes (hundreds of jets on the horizontal axis, and millions of dollars on the vertical axis). Suppose around the world, a 2 (million dollar) tariff is placed on United States Airplanes. What will exports of planes now be (round to one significant digit). Tricky question. Consider the diagram below, depicting the United States Market for Airplanes (hundreds of jets on the horizontal axis, and millions of dollars on the vertical axis). Suppose around the world, a 2 (million dollar) tariff is placed on United States Airplanes. Given exports, about how much will United States producers of airplanes wind up paying in tariffs?