Please answer the questions in the photo. Consider a hypothetical example of trade in aluminum between the United States and China. For simplicity, assume that China is the only source ofU.S. aluminum imports. The following graph shows the U.S. market for aluminum. Note that in the absence of any trade, the market price foraluminum in the United States is $500 per tonne, and the equilibrium quantity is 100 million tonnes per month.Use the green area (triangle symbol) to show U.S. consumer surplus under free trade with China, and use the purple area (diamond symbol) to showU.S. producer surplus under free trade with China.PRICE (Dollars per tonne)1000900800700600500400300200 +10000Domestic DemandDomestic Supply20 40 60 80 100 120 140 160 180 200QUANTITY OF ALUMINUM (Millions of tonnes per month)Free TradeFree Trade PriceTrade withTariffUse the previous graph to complete the first row of the following table by indicating the quantity of aluminum supplied by U.S. producers, demandedby U.S. consumers, and imported from China under free trade.Consumer SurplusQuantity Supplied by U.S. Producers(Millions of tonnes of aluminum permonth)Producer SurplusQuantity Demanded by U.S.Consumers(Millions of tonnes of aluminum permonth)Quantity Imported from China(Millions of tonnes of aluminum permonth) Suppose American aluminum manufacturers convince the U.S. government that Chinese firms are selling aluminum in the U.S. market at well belowthe cost of producing the aluminum, a practice known as dumping. In response to the accusations, the U.S. government puts a tariff of $100 pertonne on aluminum from China. The tariff increases the price of aluminum from $300 to $per tonne.Complete the second row of the previous table by indicating the quantity of aluminum supplied by U.S. producers, demanded by U.S. consumers, andimported from China in the presence of a $100-per-tonne tariff.On the following graph, use the black line (cross symbol) to indicate the domestic price of aluminum in the presence of a $100-per-tonne tariff. Thenuse the green area (triangle symbol) to shade the area that represents consumer surplus under the tariff, and use the purple area (diamond symbol)to shade the area that represents producer surplus under the tariff. Finally, use the grey rectangle (star symbols) to show the revenue that the U.S.government collects as a result of the tariff, and use the tan triangles (dash symbols) to show the deadweight loss (DWL) from the imposition of thetariff.Note: There are two DWL triangles. Plot the right-most DWL triangle first, then plot the left-most DWL triangle after that. Plotting the DWL trianglesout of order may cause your answer to be graded incorrectly.PRICE (Dollars per tonne)100090080070060050040030020010000Domestic DemandDomestic SupplyFree Trade Price20 40 60 80 100 120 140 160 180 200QUANTITY OF ALUMINUM (Millions of tonnes per month)O TrueO False+Price with TariffAConsumer SurplusDProducer SurplusTariff RevenuePDWLⒸTrue or False: According to this model, restricting trade using tariffs helps consumers but harms domestic producers.

As shown in the figure below when there is free trade the quantity supplies is 60 quantity of…

8 1000 900 800 700 + 600+ 500 400 + 300 200 100 0 0 Domestic Demand I Domestic Supply Free Trade Price 180 200 20 40 60 80 100 120 140 160 QUANTITY OF ALUMINUM (Millions of tonnes per month) A Consumer Surplus Producer Surplus +

8 1000 900 800 700 + 600+ 500 400 + 300 200 100 0 0 Domestic Demand I Domestic Supply Free Trade Price 180 200 20 40 60 80 100 120 140 160 QUANTITY OF ALUMINUM (Millions of tonnes per month) A Consumer Surplus Producer Surplus +

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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