If the world price of shoes is $50/pair, how many pairs of shoes will be produced in the U.S.? How many pairs will be consumed? What is the level (quantity) of exports or imports? Suppose the government places a $25/pair tariff on shoes. What are the new levels of U.S. production, consumption, imports or exports, and price paid for shoes by Americans? Price ($/pair)150125100755025O2U.S. Market for ShoesP6U.S. Supply008U.S. DemandQuantity (millions of shoes)

The US market is experiencing an equilibrium at price $100, where the demand rate is 40 million shoes. Any price below $100 would result in excess demand while any price above it would result in excess supply. The equilibrium price was $100 and the given condition is below the equilibrium price, which means that there will be an excess supply of the good. If the world price in the economy is $50, the quantity demanded is 8 units and the quantity suppled is 2 units. Thus, there is a shortage of supply, which gets compensated by importing the rest of good.The level of import is A tariff of $25 was imposed. It means that the world price for the market will be nowAt market price $75, the quantity demanded is 6 units and the quantity supplied is 3 units, which again would require the economy to import.The level of import is now At a world price of $50, the quantity demanded is 8 units supplied is 2 units and the level of import is 6 units.The new world price after a tariff is $75, where the demand is 6 units and the supply is 3 units, resulting in the import of 3 units of goods.

Answered: If the world price of shoes is…

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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If the world price of shoes is $50/pair, how many pairs of shoes will be produced in the U.S.? How many pairs will be consumed? What is the level (quantity) of exports or imports?

Suppose the government places a $25/pair tariff on shoes. What are the new levels of U.S. production, consumption, imports or exports, and price paid for shoes by Americans?

Price ($/pair)
150
125
100
75
50
25
O
2
U.S. Market for Shoes
P
6
U.S. Supply
00
8
U.S. Demand
Quantity (millions of shoes)

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