Consider the market for sugar in the United States depicted in the figure to the right. Assume the world price of sugar is $0.04 per pound, and at that price the United States can buy as much sugar as it wants without causing the world price to rise. Now suppose a tariff imposed by the government completely eliminates trade. As a result of the tariff, consumers will be surplus, and producers will be off in terms of consumer off in terms of producer surplus. Use the traingle drawing tool to indicate the total loss of surplus for the United States as a result of the tariff by shading in domestic dead weight loss. Property label this shaded area. Carefully follow the instructions above, and only draw the required objects. Price of sugar (per pound) 0.36 0.32- 0.28 0.24 0.20 016- 0.12 0.06 0.04+ 0.00+ Supply World Price Demand 412 16 20 24 28 32 36 40 Quantity of sugar (billion pounds per year)

Consider the market for sugar in the United States depicted in the figure to the right. Assume the world price of sugar is $0.04 per pound, and at that price the United States can buy as much sugar as it wants without causing the world price to rise. Now suppose a tariff imposed by the government completely eliminates trade. As a result of the tariff, consumers will be surplus, and producers will be off in terms of consumer off in terms of producer surplus. Use the traingle drawing tool to indicate the total loss of surplus for the United States as a result of the tariff by shading in domestic dead weight loss. Property label this shaded area. Carefully follow the instructions above, and only draw the required objects. Price of sugar (per pound) 0.36 0.32- 0.28 0.24 0.20 016- 0.12 0.06 0.04+ 0.00+ Supply World Price Demand 412 16 20 24 28 32 36 40 Quantity of sugar (billion pounds per year)

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

The U.S. is an importer of ethanol, and let’s assume they are a price-taker in the world market. Suppose that a technological advance in ethanol production in Brazil, the world’s largest exporter, drives down the world price of ethanol by $5. Draw a graph and explain how this change in world price affects consumer surplus, producer surplus, and total surplus in the U.S. market. Now suppose the U.S. government institutes an import tariff of $5 in response to the fall in the world price. On your graph label the revenue raised by the tariff and the deadweight loss created (if it exists). Who is likely to support this policy? Suppose that the fall in price is attributable not to a technological advance but to a subsidy from the Brazilian government to Brazilian ethanol producers. How would this affect your analysis?
Because Zambia participates in international trade in the market for soybeans, it will import tons of soybeans. Now suppose the Zambian government decides to impose a tariff of $10 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes , and Zambia will import tons of soybeans. Use the following graph to show the effects of the $10 tariff
Consider the Colombian market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Colombia. Suppose Colombia's government currently does not allow international trade in soybeans. Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity of soybeans in Colombia in the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium. Based on the previous graph, total surplus in the absence of international trade is . The following graph shows the same domestic demand and supply curves for soybeans in Colombia. Suppose that the Colombian government changes its international trade policy to allow free trade in soybeans. The horizontal black line (PWPW) represents the world…
Suppose Colombia is open to free trade in the world market for soybeans. Because of Colombia’s small size, the demand for and supply of soybeans in Colombia do not affect the world price. The following graph shows the domestic soybeans market in Colombia. The world price of soybeans is PW=$400 per ton.
China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 11.5 – Q Supply: P = 5.5 + Q Price is in 10 Yuan (¥) per bushel of soybeans and the units for Quantity are 100 million bushels per year. This is to make graphing simpler. This does NOT mean that the price is 10 and quantity is 100. Rather it means that if the price was 40¥ and the quantity was 7,500,000,000 bushels, this would plot as 4 and 7.5 respectively. The world price for soybeans is ¥65/bushel (this would graph as a horizontal line at 6.5). Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including: Domestic Demand curve (D), Domestic Supply curve (S), the World Price (WP), and the Price with tariffs (PT), along with the quantities imported both with and without the tariff. Based on your graph, what…
The following graph shows the domestic supply of and demand for wheat in Bangladesh. The world price (Pw) of wheat is $245 per bushel and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 515 Domestic Demand Domestic Supply 485 455 425 395 365 + 335 305 275 P W 245 215 10 20 30 40 50 80 70 80 90 100 QUANTITY (Bushels of wheat) PRICE (Dollars per bushel)
The following graph shows the domestic supply of and demand for maize in Guatemala. The world price (Pr) of maize is $255 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 435 Domestic Demand Domestic Supply 415 305 375 355 X 335 315 295 275 Pu W 255 235 0 40 80 300 400 120 100 200 240 280 320 QUANTITY (Tons of maize) If Guatemala is open to international trade in maize without any restrictions, it will import. tons of maize. per ton will Suppose the Guatemalan government wants to reduce imports to exactly 80 tons of maize to help domestic producers. A tariff of S achieve this. A tariff set at this level would raise $ in revenue…
The following graph shows the domestic supply of and demand for maize in Burundi. The world price (Pw) of maize is $270 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 450 Domestic Demand Domestic Supply 430 410 390 370 350 330 310 290 P 270 250 40 80 120 180 200 240 280 320 360 400 QUANTITY (Tons of maize) If Burundi is open to international trade in maize without any restrictions, it will import tons of maize. Suppose the Burundian government wants to reduce imports to exactly 160 tons of maize to help domestic producers. A tariff of per ton will achieve this. A tariff set at this level would raise $ in revenue for the…
Kazakhstan is an apple producer, as well as an importer of apples. Suppose the following graph shows Kazakhstan's domestic market for apples, where Sx is the supply curve and Dx is the demand curve. The free trade world price of apples (Pw) is $200 per ton. Suppose Kazakhstan's government restricts imports of apples to 120,000 tons. The world price of apples 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 apples with a quota of 120,000 apples. PRICE (Dollars perton) 1000 900 800 700 000 500 400 300 200 -- 100 D 0 30 00 90 120 160 Sk 180 210 240 270 300 5x+Q -- Price with Quota Change in PS Quota Rents DWL
The following graph shows the domestic supply of and demand for maize in Panama. The world price (Pw) of maize is $250 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 475 450 425 400 375 350 325 300 275 250 225 Domestic Demand 0 10 20 Domestic Supply 30 40 50 60 70 QUANTITY (Tans of maize) PW A tariff set at this level would raise $ 80 90 100 If Panama is open to international trade in maize without any restrictions, it will import Suppose the Panamanian government wants to reduce imports to exactly 20 tons of maize to help domestic producers. A tariff of $ achieve this. tons of maize. in revenue for the…
4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Guatemala. The world price (Pw) of soybeans is $550 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 830 Domestic Demand Domestic Supply 795 760 725 O 690 655 620 585 Pw 550 515 480 30 60 06 120 150 180 210 240 270 300 QUANTITY (Tons of soybeans) PRICE (Dollars per ton)
The following graph shows the same domestic demand and supply curves for soybeans in Venezuela. Suppose that the Venezuelan government changes its international trade policy to allow the free trade of soybeans. The horizontal black line (PW) represents the world price of soybeans at $350 per ton. Assume that Venezuela's entry into the world market for soybeans has no effect on the world price and there are no transportation or transaction costs associated with international trade in soybeans. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the green point (triangle symbol) to shade consumer surplus, and then use the purple point (diamond symbol) to shade producer surplus. When Venezuela allows free trade of soybeans, the price of a ton soybeans in Venezuela will be $350. At this price, tons of soybean will be demanded in Venezuela, and tons will be supplied by domestic suppliers. Therefore,…