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.?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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