7. (Figure: The Domestic Market for Sugar) Use Figure: The Domestic Market for Sugar. Assume that PA is the domestic equilibrium price without trade and that PW is the world price. Before international trade, consumer surplus is equal to the area: Price of sugar (per ton) D РА A B C P JE D Qo Q₁ Qs Domestic supply Domestic demand

7. (Figure: The Domestic Market for Sugar) Use Figure: The Domestic Market for Sugar. Assume that PA is the domestic equilibrium price without trade and that PW is the world price. Before international trade, consumer surplus is equal to the area: Price of sugar (per ton) D РА A B C P JE D Qo Q₁ Qs Domestic supply Domestic demand

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 debate over whether the United States should impose trade restrictions on imported tires: The president of the United States argues that the government should impose a tariff on tires because they are a necessary input into the production of various weapons. Free trade would make the United States overly dependent on foreign countries for the supply of tires. In case of a war, the United States might not be able to make or purchase enough tires and, therefore, would not be able to make enough weapons to defend itself. Which of the following justifications is the president using to argue for the trade restriction on tires? Jobs and income argument Infant-industry argument OUsing-protection-as-a-bargaining-chip argument O Unfair-competition argument National-defense argument
A5
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0₁ 1 tern allia (6) Consider two countries: Fineland and Sineland, producing two goods: mobiles and iPods, under perfectly competitive market conditions. Fineland exports mobiles and imports iPods. Sineland exports iPods and import mobiles. Assuming well-behaved offer curves for both the countries, illustrate with help of a neatly labeled diagram, as to what would happen if there is sudden fall in the supply of iPods by Sineland? (6 g pang
Price of Baskets $14 10 7 1 0 $210 $245 $420 40 $455 70 105 Domestic Supply Refer to Figure 9-1. Without trade, what would consumer surplus be? World Price Domestic Demand Quantity of Baskets
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The U.S. subsidizes domestic farmers to ensure that they remain profitable and continue to produce agricultural products. Explain the main argument for ensuring domestic production of agriculture products (even though domestic-produced agriculture costs buyers more than foreign-produced agriculture) and not needing to rely 100% on foreign-produced agriculture. Who are the "winners" of the farming subsidies? How do they benefit? Who are the "losers" of the farming subsidies? What does it cost them?
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5
Question 3 Like tariffs, quotas tend to lead to higher prices and reduced imports. increased government revenue. O increased consumer surplus. O All of these.
B3