$16 Price 14 12 10 6 10 20 30 40 50 60 70 80 90 Quantity The world price of the product is $6. If an import quota of 40 units is imposed on the product, then the equilibrium price would be $ 8 quantity consumed would be 70 Compared to the free-trade equilibrium, the price of the good is higher units and the quantity consumed is lower and the

$16 Price 14 12 10 6 10 20 30 40 50 60 70 80 90 Quantity The world price of the product is $6. If an import quota of 40 units is imposed on the product, then the equilibrium price would be $ 8 quantity consumed would be 70 Compared to the free-trade equilibrium, the price of the good is higher units and the quantity consumed is lower and the

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter34: World Trade Equilibrium

Section: Chapter Questions

Problem 7E

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Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply (s) for cameras In Thailand and Japan is described by the following functions: QsT=-5+14P QsJ=-10+14P QdT=60-P QdJ=80-P P is the price measured in a common currency used in both countries, such as the Thai Baht. Compute the equilibrium price (P) and quantities in each country without trade. Now assume that free trade occurs. The free-trade price goes to 56.36 Baht. Who exports and Imports cameras and in what quantities?
Trade has income distribution effects. For example, suppose that because of a government-negotiated reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you expect this pattern of trade to increase or decrease jobs and wages in the paint industry in Germany? The alarm clock industry in Germany? The paint industry in Czech Republic? The alarm clock industry in Czech Republic? What has to happen for there to be no increase in total unemployment in both countries?
From the Work It Out Effects of Trade Barriers, you can see that a tariff raises the price of imports. What is interesting is that the price rises by less than the amount of the tariff. Who pays the rest of the tariff amount? Can you show this graphically?
The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 34.6 and Table 34.7. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell? What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell? Sketch two supply and demand diagrams, one for each country, in the situation before trade. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade. If the Land of Submarines imposes an anti- dumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country. Does your general answer change if the Land of Submarines imposes an import quota of 70?
Consider two countries: South Korea and Taiwan. Taiwan can produce one million mobile phones per day at the cost of 10 per phone and South Korea can produce 50 million mobile phones at 5 per phone. Assume these phones are the same type and quality and there is only one price. What is the minimum price at which both countries will engage in trade?
Show graphically that for any tariff, there is an equivalent quota that would give the same result. What would be the difference, then, between the two types of trade barriers? Hint: It is not something you can see from the graph.
How would direct subsidies to key industries be preferable to tariffs or quotas?
Consider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply for steel in this country. One of the two price lines represents the world price of steel. ecause this country exports steel, the world price is represented by . Suppose that a “pro-trade” government decides to subsidize the export of steel by paying $10 for each ton sold abroad. With this export subsidy, the price paid by domestic consumers is per ton, and the price received by domestic producers is per ton. The quantity of steel consumed by domestic consumers , the quantity of steel produced by domestic producers , and the quantity of steel exported . True or False: With the export subsidy, domestic producers will sell steel to domestic consumers and sell the rest abroad. True False Under the export subsidy, consumer surplus is and producer surplus is . Government revenue by (increases or Decreases) . As a…
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.
Price Use the following graph, where Sd and Dd are the domestic supply and demand for a product and P is the world price of that product, to answer the next question. P S Sa+Q P E G H F Pe K Dd 0 V W x y Quantity Z Sd+Q is the product supply curve after an import quota is imposed. The effect of the import quota on domestic price and domestic consumption is A) the same as that of a tariff of P₁-Pc. B) the same as that of a tariff of Pa-Pt- the same as that of a tariff of Pa-Pc.
Use the graph below and the following information to answer the next question(s). The world price of soybeans is $2.00 per bushel, and the importing country is small enough not to affect the world price. 2.25 2.00 Figure 6.1 60 70 130 140 Q/millions bushels World price Based on Figure 6.1, given a tariff of $0.25 per bushel on soybean imports, how much will domestic production increase?
Consider the effects of an import tariff in a small coutnry using the graph below. Domestic Supply Pw +t P Domestic Demand 40 45 75 95 105 Which area on the graph corresponds to consumption loss? What is domestic consumption with free trade? O W O Y