A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good isQs = 50+ 5PThe demand curve isQd = 400-10PIn addition, each unit of production yields a marginal social benefit of 10.a. The welfare gain from a tariff of $5 per unit levied on imports is $. (Round your answer to the nearest penny)b. The welfare gain from a production subsidy of $5 per unit $. (Round your answer to the nearest penny)c. Why does the production subsidy produce a greater gain in welfare than the tariff?O A. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare.OB. The production subsidy more directly addresses the externality.C. The $5.00 production subsidy increases production more than the $5.00 tariff.D. Both A and BO E. All of the aboved. The optimal production subsidy is $(Round your answer to the nearest penny.)

The demand function represents the relationship between the change in a product and the extent of…

A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is Q = 50+ 5P The demand curve is Qd = 400-10P In addition, each unit of production yields a marginal social benefit of 10. a. The welfare gain from a tariff of $5 per unit levied on imports is $ (Round your answer to the nearest penny) b. The welfare gain from a production subsidy of $5 per unit $ c. Why does the production subsidy produce a greater gain in welfare than the tariff? (Round your answer to the nearest penny) O A. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. OB. The production subsidy more directly addresses the externality. OC. The $5.00 production subsidy increases production more than the $5.00 tariff. OD. Both A and B O E. All of the above d. The optimal production subsidy is $ (Round your answer to the nearest penny.)

A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is Q = 50+ 5P The demand curve is Qd = 400-10P In addition, each unit of production yields a marginal social benefit of 10. a. The welfare gain from a tariff of $5 per unit levied on imports is $ (Round your answer to the nearest penny) b. The welfare gain from a production subsidy of $5 per unit $ c. Why does the production subsidy produce a greater gain in welfare than the tariff? (Round your answer to the nearest penny) O A. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. OB. The production subsidy more directly addresses the externality. OC. The $5.00 production subsidy increases production more than the $5.00 tariff. OD. Both A and B O E. All of the above d. The optimal production subsidy is $ (Round your answer to the nearest penny.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose you have the following for white t-shirts market:Market demand is P=125-(3/8)QMarket supply is P=5+(1/8)Q. there is now a global supply that is horizontal at $15. But the government now imposes a tariff of $5 per unit of t-shirt.a. Obviously the world price and domestic price will now be $20. Calculate the quantityproduced and demanded domestically? b. Using graphs show the changes in CS (Consumer Surplus) and PS (Producer Surplus) comparedto Free Trade. Show also the government revenue, which is tariff per t-shirt times the new level of imports. Who gains in comparison to Free Trade scenario? Who loses? What is the welfare gain or loss? Show by using graphs.
Economics Question
Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and DK is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 60,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota Sk+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 60,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 20 SK K P W 40 60 80 100 120 140 160 180 200 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for…
Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and Dk is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 120,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 120,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 40 80 120 160 200 SK 240 10 0² W 280 320 360 400 SK+Q Price with Quota A Change in PS Quota Rents DWL ?
Find the consumer and producer surpluses by using the demand and supply functions, where p is the price (in dollars) and x is the number of units (in millions). Demand Function: p = 1220 − 21x Supply Function: p = 40x
The small nation of Capralia has an abundant stock of Pashmina goats, a breed that yields high-quality cashmere. Capralia's authorities are still debating whether to open their economy to international trade. The international price of cashmere is $70,000 per metric ton, and the Capralian cashmere sells for $50,000 per metric ton. Place the consumer surplus triangle (CS) and the producer surplus triangle (PS) to correctly depict consumer and producer surplus if Capralia chooses to open its borders to the international cashmere trade. 100 Price (metric ton) 90 80 70 80 50 40 30 20 10 10 0 Capralia's Domestic Cashmere Market 6 domestic supply domestic equilibrium 12 18 24 30 36 42 Quantity (thousands of metric tons) 48 54 60 CS Capralia will import 36,000 metric tons of cashmere. Capralia will export 24.000 metric tons of cashmere. Capralia will not engage in international trade. Capralia will export 12,000 metric tons of cashmere. Capralia will import 24,000 metric tons of cashmere. PS…
Consider the pharmaceutical market in the US. The demand is Q = 200 - 2P Q P while supply is 2 40s Q P. The free trade price is 25. A) Calculate consumer surplus, producer surplus, total surplus, and imports under free trade. Illustrate all of these on a fully labelled graph. B) Suppose that the US puts a tariff of 6 on pharmaceuticals. When it does this, the free trade prices falls to 24. Calculate consumer surplus, producer surplus, tariff revenues, total surplus and deadweight loss under the tariff. Illustrate all of these on a fully labelled graph. C) Is the country better off under the tariff or free trade? How do you know?
Domestic demand for natural gas in a small economy is characterized by the equation P=350-5QP=350-5Q , domestic supply is characterized by the equation Q=0.5-P+35Q=0.5-P+35 , and the world price is equal to $60. An export tariff of $6 per unit will Group of answer choices result in net welfare loss of 14.6 lead to a loss in consumer surplus lead to an export level that is less than half of the original amount result in tariff revenue that is larger than the loss in producer surplus
Consider the market for wheat as shown in the Wheat Exports figure. In that figure, the world price p., for wheat is $300 per tonne. a) Perform a Welfare Analysis on the free trade equilibrium. That is, describe and show the Consumer Surplus, Producer Surplus, Government Tax Receipts, Total Surplus, and any Deadweight Loss. b) Suppose the government introduces a tax on exported wheat, so that firms must pay the government $75 per tonne of wheat exported. (i) Argue why this would reduce the price paid by domestic consumers, even though wheat sold to them does not attract the tax. (ii) Perform a Welfare Analysis on the effect of this tax. That is, describe and show the Consumer Surplus, Producer Surplus, Government Tax Receipts, Total Surplus, and any Deadweight Loss. (iii) For any Deadweight Loss identified, give an intuitive description of why this deadweight loss exists. c) Suppose instead the tax were $150 per tonne for exports. (i) What price would domestic consumers now pay for…
Lesson 12 Question 1
5. Agricultural export subsidies in a small nation The following graph shows the market for wheat in Canada, where Do is the demand curve, Sc is the supply curve, and Pw is the free trade price of wheat. Assume that Canada is a relatively small producer of wheat, so changes in its output do not affect the world price of wheat. Also assume that Canada is currently open to free trade, and domestic consumers are able to purchase wheat at the world price with negligible transportation costs. Suppose a subsidy of $80 per ton is granted to exporters in Canada, allowing them to sell their products abroad at prices below their costs. Assume that trade restrictions are also put in place in order to prevent domestic consumers from buying wheat abroad at the world price. Use the grey line (star symbols) to indicate the world price of wheat plus the subsidy on the following graph. Then use the black point (plus symbol) to indicate the price of wheat in Canada and the quantity demanded at that…
Foreign's demand curve for wheat is p*=8-1/20q*d. Its supply curve is p*=2+1/20q*s Determine the effect of the tariff on