**Text Transcription for Educational Website**---**Domestic Supply and Demand with Free Trade Analysis**Figure 1 illustrates a country's domestic supply and demand curves for a particular good, alongside the world price, denoted as Pw. This price is relevant to the country as a small participant in the world market, should it engage in free trade. Initially, the country was not participating in trade with the global market, but it has now started to engage in free trade. Refer to this diagram for questions 13-15.**Diagram Explanation**The graph contains:- **Axes**: - Vertical axis labeled "Price." - Horizontal axis labeled "Quantity."- **Curves**: - An upward-sloping line representing the "Supply" curve. - A downward-sloping line representing the "Demand" curve.- **Price Levels**: - P0: A price level above the world price, Pw. - Pw: The world price. - Pw + x: A price level above Pw.- **Areas**: - A series of labeled regions within the graph (a, b, c, d, e, f, g, h, i) representing different economic factors or effects.- **Quantity Markers**: - Q1, Q2, Q3, Q4, Q5: Points along the "Quantity" axis indicating different levels of supply and demand.To determine the **quantity imported** with free trade, analyze the distance between Q4 and Q2 when the price is set at Pw.**Question:**According to Figure 1, what is the **Quantity imported with free trade**?- [ ] Q5 - Q1- [ ] Q5 - Q2- [ ] Q5- [ ] Q4 - Q2---(Note: Explain the economic implications of such diagrams on a small economy engaging in free trade, considering shifts in consumer and producer surplus, changes in social welfare, and competitive dynamics.)

An import is a good or service bought in one country that was produced in another country.

Answered: Figure 1 shows a country's domestic…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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2. Welfare effects of a tariff in a small country Suppose Guatemala is open to free trade in the world market for oranges. Since Guatemala is small relative to the international market, the demand for and supply of oranges in Guatemala have no impact on the world price. The following graph shows the domestic market for oranges in Guatemala. The world price of a ton of oranges is Pw = $350. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 710 Domestic Demand Domestic Supply 670 630 590 550 510 470 430 28 8 8 8 8 8 8 8 390 350 P. 310 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Tons of oranges) CS PS Because Guatemala participates in international trade in the market for oranges, it will import tons of oranges. Now suppose the Guatemalan…
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Question 6: The graphs below pertain to the US and world markets for solar panels. Answer the questions below by filling in the blanks with the correct numbers and letters and circling the underlined that you judge to be correct. a) Under autarky, the US price of solar panels is $____. Under free trade, the US price of solar panels is $______and the US imports/exports ______ millions of solar panels. The graph above assumes that the US sets a quota of 7 million on the imports of solar panels. b) The above quota increases/decreases the US price of solar panels to $_____and the quota is/is not binding. c) After the quota is imposed, the world price of solar panels is $_______and the US imports ________millions of solar panels. d) Calculate the tariff that would have the same effect on the US price and imports as the quota of 7 million:_______________. e) The quota increases/decreases US consumer surplus by_________,and increases/decreases US producer surplus by____________. f) The quota…
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. Use the following graph to help you answer the questions below. You will not be graded on any changes made to this graph. Because 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…
6. The arguments for restricting trade Suppose there is a policy proposal to increase trade restrictions on imported microprocessors to the United States. Read the following scenario and answer the question that follows. The president of the United States argues that the United States should threaten to impose a tariff on Chinese microprocessors in order to induce the Chinese to remove its tariff on American cars. Which of the following justifications is the president using to support their argument in favor of the trade restriction on microprocessors? Unfair-competition argument Infant-industry argument Jobs argument Using-protection-as-a-bargaining-chip argument National-security argument
10. Problems and Applications Q10 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. Use the following graph to help you answer the questions below. You will not be graded on any changes made to this graph. Price of Steel (Dollars perton) 100 90 2 2 2 2 2 2 - 60 40 30 20 10 Demand 0 100 200 300 400 500 600 700 Quantity of Steel (Tons) Supply 800 900 1000 Triangle Polygon
↳ A Click Submit to complete this assessment. Question 33 What insights do welfare analysis (consumer surplus/producer surplus) offer into international trade? O a. That trade increases the welfare of producers, so trade may make total surplus fall. O b. That tariffs make a country better off and trade wars can definitely be won! Oc. That nations are better off NOT trading with each other, because lower world prices harm most nations' producers and consumers. Od. That while trade increases total surplus, consumers or producers in a country may gain or lose, depending on world price. A Click Submit to complete this assessment. tab caps lock shift fn 1 Q 2 A W Z I 3 S E X S D R C F T V G H B J N K
A 5 peso import tariff would raise how much government revenue? a) $3,000 b) 9,500 c) $12,500 d) $6,500
1. Explain in detail a) What is the welfare impact of quotas compared to tariffs? b) Which one of the two (quotas or tarrifs) is a more flexible tool to use?
4. Tariffs Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw =$250 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). 490 Domestic Demand Domestic Supply 460 CS 430 400 370 PS 340 310 280 250 220 190 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of tons of wheat) If Kenya allows international trade in the market for wheat, it will import tons of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported ton of wheat. After the tariff, the price Kenyan consumers pay for a ton of wheat is $ and Kenya will import tons…
Q.2 Given the Equilibrium relative price Nation 1 Pa Pa 1 Nation 2 60 PA 4 Pr 2 50 - 40 30 P 20 PA 10 01 10 20 30 40 50 60 FIGURE 4.5 Equilibrium-Relative Commodity Price with Trade. Using a graph of offer curves, for each of the following, identify the effect of the change listes relative price of good X and on exports of good X by Nation 1. a. The supply ofY increases in Nation 2. 6. The demand for X decreases in Nation 1.
[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.] [Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences. How to draw the graph?

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