For all questions be sure to explain your answers and to use graphs whenever appropriate. 1. Consider a good that the U.S. imports, such as furniture. a. Suppose there is a fall in the world price of furniture. Show the effects of this development both in a PPC/CPC diagram (with furniture on the horizontal axis and everything else on the vertical axis) and in a supply and demand diagram with international trade. How will the fall in the world price affect U.S. furniture production, U.S. furniture consumption, and U.S. furniture imports? b. How will the fall in the world price of furniture affect consumer surplus, producer surplus, and total economic surplus in the U.S.?

For all questions be sure to explain your answers and to use graphs whenever appropriate. 1. Consider a good that the U.S. imports, such as furniture. a. Suppose there is a fall in the world price of furniture. Show the effects of this development both in a PPC/CPC diagram (with furniture on the horizontal axis and everything else on the vertical axis) and in a supply and demand diagram with international trade. How will the fall in the world price affect U.S. furniture production, U.S. furniture consumption, and U.S. furniture imports? b. How will the fall in the world price of furniture affect consumer surplus, producer surplus, and total economic surplus in the U.S.?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter28: International Trade

Section: Chapter Questions

Problem 9P

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