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I. Consider the market for sugar in the U.S. It is difficult to grow sugar outside of warm, humid climates, so outside of the Gulf Coast (Florida, Louisiana, parts of Texas) and Hawaii it is difficult to grow sugar in the U.S. With that in mind suppose the market for sugar in the U.S. is described by the equations = 15 – P Qs The quantities are in millions of kg and the price is in $/kg. 3 ЗР — 1 а. Find the market equilibrium if no trade is allowed (i.e. autarky). Now suppose the U.S. opens up to trade in a large, global market. The U.S. makes only 4% of the world's sugar cane so you can use the small country model here. The world price is Pw 2. Find the quantity demanded, quantity supplied, and amount imported with free trade. This will help to make a diagram and answer the question below. b. How much does surplus increase due to opening up to trade? (i.e. what is the "gain from trade?") million Now suppose the government imposes a $1/kg tariff. How much tariff revenue for it collect? C. tariff revenue = million

I. Consider the market for sugar in the U.S. It is difficult to grow sugar outside of warm, humid climates, so outside of the Gulf Coast (Florida, Louisiana, parts of Texas) and Hawaii it is difficult to grow sugar in the U.S. With that in mind suppose the market for sugar in the U.S. is described by the equations = 15 – P Qs The quantities are in millions of kg and the price is in $/kg. 3 ЗР — 1 а. Find the market equilibrium if no trade is allowed (i.e. autarky). Now suppose the U.S. opens up to trade in a large, global market. The U.S. makes only 4% of the world's sugar cane so you can use the small country model here. The world price is Pw 2. Find the quantity demanded, quantity supplied, and amount imported with free trade. This will help to make a diagram and answer the question below. b. How much does surplus increase due to opening up to trade? (i.e. what is the "gain from trade?") million Now suppose the government imposes a $1/kg tariff. How much tariff revenue for it collect? C. tariff revenue = million

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I. Consider the market for sugar in the U.S. It is difficult to grow sugar outside of warm, humid climates, so outside of the Gulf Coast (Florida, Louisiana, parts of Texas) and Hawaii it is difficult to grow sugar in the U.S. With that in mind suppose the market for sugar in the U.S. is described by the equations QD 3D 15 — Р Qs The quantities are in millions of kg and the price is in $/kg. = 3P – 1 а. Find the market equilibrium if no trade is allowed (i.e. autarky). Now suppose the U.S. opens up to trade in a large, global market. The U.S. makes only 4% of the world's sugar cane so you can use the small country model here. The world price is Pw 2. Find the quantity demanded, quantity supplied, and amount imported with free trade. This will help to make a diagram and answer the question below. b. How much does surplus increase due to opening up to trade? (i.e. what is the "gain from trade?") $. million Now suppose the government imposes a $1/kg tariff. How much tariff revenue for it collect? С. tariff revenue = $ million
Transcribed Image Text:I. Consider the market for sugar in the U.S. It is difficult to grow sugar outside of warm, humid climates, so outside of the Gulf Coast (Florida, Louisiana, parts of Texas) and Hawaii it is difficult to grow sugar in the U.S. With that in mind suppose the market for sugar in the U.S. is described by the equations QD 3D 15 — Р Qs The quantities are in millions of kg and the price is in $/kg. = 3P – 1 а. Find the market equilibrium if no trade is allowed (i.e. autarky). Now suppose the U.S. opens up to trade in a large, global market. The U.S. makes only 4% of the world's sugar cane so you can use the small country model here. The world price is Pw 2. Find the quantity demanded, quantity supplied, and amount imported with free trade. This will help to make a diagram and answer the question below. b. How much does surplus increase due to opening up to trade? (i.e. what is the "gain from trade?") $. million Now suppose the government imposes a $1/kg tariff. How much tariff revenue for it collect? С. tariff revenue = $ million
Expert Solution
Step 1

1. Given demand curve for sugar in the US :-

QD = 15 - P

Supply curve :-

QS = 3P - 1

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