A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is The demand curve is 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 S. (Round your answer to the nearest penny) c. Why does the production subsidy produce a greater gain in welfare than the farift? Q₂ = 50+5P (Round your answer to the nearest penny) Q-400-10P OA. The production subsidy more directly addresses the externality. OB. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. OC. The $5.00 production subsidy increases production more than the $5.00 tariff. OD. Both A and B OE. All of the above d. The optimal production subsidy is $

A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is The demand curve is 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 S. (Round your answer to the nearest penny) c. Why does the production subsidy produce a greater gain in welfare than the farift? Q₂ = 50+5P (Round your answer to the nearest penny) Q-400-10P OA. The production subsidy more directly addresses the externality. OB. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. OC. The $5.00 production subsidy increases production more than the $5.00 tariff. OD. Both A and B OE. All of the above d. The optimal production subsidy is $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use a graph of your choice to briefly illustrate the overall welfare effects of introducing an import tariff in a small country.
Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product to answer the next question. Price a Pe 0 E V F K G H X Quantity у Z Sd + Q is the product supply curve after an import quota is imposed. A quota of y-w will result in quota rent equal to areas OA) F + G + H+ J. C) G + H. OD) F + J. $.+Q B) E+F+G+H+ J.
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Price per Saddle Domeslic Supply A P2 Tariff World Price C P1 Domestic Demand Q1 Q2 Quantity of Saddles Q3 Q4 With the tariff in place, the new quantity of imports equals Q4 - Q1 Q2 Q3 O Q3- Q2
Price P1 P3 Y V P2 U D Quantity Q1 Q4 Qs Q3 Figure 4 Domestic market for a good Figure 4 shows a country's domestic market for a good. There is perfect competition. The supply curve, S, is the domestic producers' supply curve for the good. D is the domestic consumers' demand curve. With free trade, the price in the domestic economy equals the world price, P2. However the domestic government has imposed a tariff on imports that has raised the price of the good in the domestic economy from P2 to P3. Which area or areas of the diagram show the government's tariff revenue? Select one answer. Select one: O Z O w plus Y ох O X plus Z N
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1. Suppose Country A imposed tariffs on country B's bananas. Using the graph below, identify the welfare effects of this policy. pw+T pw B A C G Re E H N Change in Consumer Surplus Change in Producer Surplus Change in Government Revenue Change in Social Welfare F J K
33. a) At $800 price, how many units of good X will the domestic consumers purchase from *domestic suppliers*? ___________ units. b) At $800 price, how many units of good X will have to be imported from abroad? _________ units. c) At $800 price what is government's tax revenue from tariff on good X imported? $________________. d) With no tariff, how many units of good X can domestic suppliers supply? ___________ units e) With no tariff, how many units of good X will the domestic consumers demand?_______________ units.
1. What do the welfare effects of an import quota differ from those of import tariff?
The US, the domestic country, is currently operating a price of $14 per hammer. The US and China are not engaging in international trade. A new treaty is signed, and the world price and domestic price of the product are now $10 per unit. The US producers claim that this new treaty will harm them. The world price of hammers is $10 per hammer before and after the treaty. A. Calculate the consumer surplus before international trade is allowed. Show your work. A. Calculate the consumer surplus after international trade is allowed. Show your work. C. Will the producers in the domestic economy support or argue against opening up to international trade? Briefly explain and support your answer.
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.
A large or small country imposing a tariff can benefit in terms of social welfare?