2. Assume two countries, Thailand (T) and Japan (J), have one good: cameras. Thedemand (d) and supply (s) for cameras in Thailand and Japan is described by thefollowing functions: Qd" = 60 – P; Qs™ =-5 + 1/4 P;=-10+ 1/2 P.Qd'= 80 – P; Qs'P is the price measured in a common currency used in botha. Compute the equilibrium price (P) andb. Now assume that free tradecountries, such as the Thai Baht.quantities (Q) in each country without trade.occurs. The free trade price goes to 56.36 Baht. Who exports and imports camerasand in what quantities?

In a free market, equilibrium price and equilibrium quantity is determined by the forces of demand…

Answered: Assume two countries, Thailand (T) and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider two countries, Home and Foreign. In the figure below, the import demand ("IDHome") curve depicts Home's demand for Foreign's flash drives, and the import supply curve ("ISForeign") depicts Foreign's supply of flash drives to Home. Assume Home is a "large" country that levies a tariff against Foreign imports of flash drives, thereby shifting the relevant supply curve from ISForeign to ISForeign +t. For the following questions, please refer to the figure below. P $30 28 26 24 22 20 18 16 15-- 14 12 10 8 6 4 2 0 2 4 ISForeign +t 6 8 10 12 14 16 18 20 22 22 24 26 28 ISForeign IDHome 30 Q With free trade, Home's consumer surplus equals $112.50 and Foreign's producer surplus equals $112.50. With a tariff of $ 12 per flash drive, Home's consumer surplus equals $72, Foreign's producer surplus equals $ 36, Home's tariff revenue equals $72, and Home's deadweight loss equals $45. Of the Home's tariff revenue, $36 comes from Foreign's producers, and the rest comes from Home's consumers.…
The figure below shows the hypothetical domestic supply and demand for baseball caps in the country of Spain. Domestic Supply and Demand for Baseball Caps Spain 10 9. 8. 7 3 2 1 Da 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps consumers are indifferent between domestic and imported baseball caps. €3 and there are no import restrictions on this product. Assume that Spanish Instructions: Enter your answers as whole numbers. a. What quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand b. What quantity of baseball caps will be imported? thousand Now suppose a tariff of €2 is levied against each imported baseball cap. C. After the tariff is implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand d. After the tariff is implemented, what quantity of baseball caps will be imported? thousand Price (€ per cap)
In a hunter-gatherer society lives 2 people, Adam and Smith. Adam picks 10 bananas a week.Smith gathers 50 wildberries a week. Both Adam and Smith enjoy eating bananas and wildberries and have product utility function. The equilibrium exchange rate is "1 banana = ??? berries"
Consider a region with two export products (gloves and socks) and two local goods (tattoos and manicures). The production of each export good is subject to localization economies, so each city specializes in one export good. According to Mr. Wizard, “If my two assumptions (one for export products and one for local goods) are correct, all the cities in the region will be the same size.” Assume that Mr. Wizard’s logic is correct. List his assumptions and explain why together they imply the region’s cities will be the same size.
As you may have heard, Russia decided to invade its neighbor, which has led to international condemnation (albeit not on all fronts). The EU, a former major importer of gas from Russai, went ahead with sanctions. Imagine, if you will, that the respective heads of state get together and try to negotiate a trade agreement to end sanctions. They each have three possible choices: (a) Maintain tariffs against the other nation (T); (b) Seek mediation from the WTO, which would implement an international trade agreement at a small cost (M); (c) Unilaterally remove tariffs (F). The payoff matrix is as given below. Is there a dominant strategy for either player? Find all the (pure strategy) Nash equilibria in the game. How would this change if, instead, the mediation is costless and yields a payoff of 50 to each nation (assuming mutually successful mediation) and a payoff of 0 (if the other nation chooses otherwise)? **
1
It has been shown that the US has a comparative advantage in capital-intensive goods while China has a comparative advantage in labour-intensive goods. Suppose as a result of trade the US's economy is going to grow by 30% and that of China by 40%. Based on this information, which of the following statements is correct? a) The US has the stronger bargaining power in the determination of the relative price after trade. b) In the US, the employers are better off while the workers are worse off as a result of trade. c) Specialization means that China will produce all the capital-intensive goods. d) China has the stronger bargaining power in the determination of the relative price after trade.
Create a diagram similar to Figure 1.4 in which demand in both countries is identical and trade arises because of differences in supply. Do another diagram in which supply is identical across nations but differences in demand lead to trade.
The offer curves of Nation 1 and Nation 2 are shown in Fig. 4.4 Figure 4.4 Y Ps Nation 1 P4 Nation 2 Describe the state of the international market for goods Y and X at an international relative price of P4, i.e., is there an excess supply, excess demand, or equilibrium in the market for goods Y and X? Based on your answer in part a, what must happen to the price of X relative to the price of Y? Based on b, in which direction must the line labelled Pa in Fig. 4.4 move? What is the state of the market at an international relative price of P3?

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