In Italy, the domestic market demand for rice is P = 100-2Q, and the domestic market supply of rice is P = 10 + Q. If the world price of rice is 20, how will consumer surplus change when Italy goes from autarky to be open to trade? It will decrease by 1200. It will increase by 700. It will decrease by 700. It will increase by 1200.

In Italy, the domestic market demand for rice is P = 100-2Q, and the domestic market supply of rice is P = 10 + Q. If the world price of rice is 20, how will consumer surplus change when Italy goes from autarky to be open to trade? It will decrease by 1200. It will increase by 700. It will decrease by 700. It will increase by 1200.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Gennifer Flowers knows that restricting trade in an attempt to get another nation to reduce their…

A: Consumer surplus denotes the benefits that the consumer derives through market participation. It is…

Q: Price $12 5 0 Korean Supply World Price Korean Demand Quantity of Shoes Refer to Figure 9-7. If…

A: Trade is the voluntarily exchange of goods or services between different economic organisations.…

Q: Would tariffs on imported wine be a price floor?

A: Imports are restricted via tariffs. Simply expressed, they raise the price of imported products and…

Q: Suppose the government of the U.S. wants to protect the domestic sugar industry by restricting sugar…

A: Supply is given as Q = P Demand is given as Q = 8 – P World price of sugar is $2/ lb. When there…

Q: When China's supply of clothing increases, the increase in world supply lowers the world price of…

Q: Explain how imposing tariffs on imports ultimately harm US consumers. Elaborate on how producer and…

A: Tariff refers to the restrictive import behavior where the domestic government imposes the tax on…

Q: The gain to consumers from trade in Country A is $_______. 15. The net gain to the economy as a…

A: Gains from trade refer to the net benefits that accrue to individuals, businesses, or countries when…

Q: Price P1 P2 D Quantity Q1 Q2 Q3 Figure 3 Domestic market for a good Figure 3 shows a country's…

A: Doemstic market equilibrium with no trade occurs when Demand and supply of goods are equal at…

Q: Explain why high tariffs have a negative impact on a country's economy.

A: The objective of this question is to understand the negative impacts of high tariffs on a country's…

Q: Question 21 Suppose supply is given by P = 2Q and demand is given by P = 1000 - 2Q. What will happen…

A: Equilibrium is achieved at the output level where Qs equals Qd.

Q: Consider a small open economy country that produces cars. The world price of cars is less than the…

A: An economy engages in international trade on the basis of the principle of comparative advantage. A…

Q: Why Japan is dependent on food import?

A: Definition: An import is a decent or administration purchased in one country that was delivered in…

Q: Please help without free trade. With free trade$ consumer surplus= product…

A: The equilibrium price and equilibrium quantity of a good sold in the market are determined by the…

Q: What do we mean by Consumer and Producer Surpluses and how are they calculated? Who benefits,…

A: Consumer surpluses A consumer is a person who makes purchases of goods and services. Finding the…

Q: In Italy, the domestic market demand for rice is P = 100 -2Q, and the domestic market supply of rice…

A: The equilibrium occurs where the demand and supply forces are equal. A country exports if the world…

Q: Questions 1 and 2 refer to a big home country exporting good Q to ROW (Rest OF the World). The…

A: The home country is exporting Q to the Rest of the World. The export and import demand for good Q is…

Q: If higher tariffs, such as those enacted by the Smoot-Hawley trade bill, reduce the imports of the…

A: Higher tariffs, often used as a protective measure to shield domestic industries from foreign…

Q: a. Derive Home’s import demand and Foreign’s supply schedule and prices of wheat in absence of…

A: Import demand indicates the demand by domestic residents but for foreign produced product not home…

Q: 23. What happens to the relative price of a good as a result of trade if there is an increasing…

A: IRS is an economic concept which shows the long-run average cost of production decreases as the…

Q: How can businesses determine the attractiveness of a foreign market?

A: The term market attractiveness is a concept that practices many factors to determine whether or not…

Q: The world price is $16 a case, and India is open to free trade. Will India export or import mangos?…

A: A country imports goods and services when its domestic demand is more than its domestic supply.A…

Q: B. Suppose home imposes a specific tariff of 5 on corn imports. Find and graph the effects of tariff…

A: Only the first three have been solved. The demand (dd) function for corn is, = home dd +…

Q: What quantity will Country B demand from the rest of the world at P=$5?

A: The demand curve is the downward sloping curve. Equilibrium is where the demand curve intersects the…

Q: 800 300 100 Price (S) 0 2 8 SM 20 SM (with subsidy) World price DM Tons of Tomatoes Refer to the…

A: Every economy tries to perform at an equilibrium where both the producer and consumer can maximize…

Concept explainers

Protective Tariffs

A tariff is a kind of tax that is charged on exported and imported items. It means tariff is charged on both kinds of goods i.e., exported and imported. However, some goods may be exempted from this kind of tariff. Protective Tariffs refer to the charges which a country charged on imported goods to protect its domestic market. It also protects countries Industrialists in their Production. So, that their markets remain intact and do not get dumped by outside supply.

Question

In Italy, the domestic market demand for rice is P
= 100-2Q, and the domestic market supply of
rice is P = 10 + Q. If the world price of rice is 20,
how will consumer surplus change when Italy
goes from autarky to be open to trade?
It will decrease by 1200.
It will increase by 700.
It will decrease by 700.
It will increase by 1200.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: State the given information:

VIEW

Step 2: Determine domestic equilibrium price and quantity:

VIEW

Step 3: Determine consumer surplus at autarky:

VIEW

Step 4: Determine the consumer surplus after free trade:

VIEW

Step 5: Determine the change in consumer surplus:

VIEW

Solution

VIEW

Step by step

Solved in 6 steps with 8 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

If the U.S. did not trade what price would the good cost? If the world price was $200 what quantity would the U.S. produce? What quantity would be imported. What is consumer surplus at the world price? Producer surplus at the world price? Who benefits from the free trade and who gets hurt If the U.S. government puts a tariff on the good so now the price is $300 who benefits, who is hurt? What quantity will U.S. producers now produce? What happens to consumer surplus from $200 to $300? What does producer surplus do with the price going from $200 to $300? What does the government gain with the tariff? Who benefits from free trade overall? Who benefits from trade restrictions? Why is a tariff the most used trade restriction?
Price P1 P3 Y V P2 U D Quantity Q1 Q4 Qs Q3 Figure 4 Domestic market for a good Figure 4 shows a country's domestic market for a good. There is perfect competition. The supply curve, S, is the domestic producers' supply curve for the good. D is the domestic consumers' demand curve. With free trade, the price in the domestic economy equals the world price, P2. However the domestic government has imposed a tariff on imports that has raised the price of the good in the domestic economy from P2 to P3. Which area or areas of the diagram show the government's tariff revenue? Select one answer. Select one: O Z O w plus Y ох O X plus Z N
Finland imports shoes into its country; they are a price taker in this market. Suppose the world price of shoes is $40. If Finland imposes a $10 tariff on shoes, what would be the domestic price of shoes and what will happen to the quantity bought? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. The quantity bought will increase and the price will be $30. a The quantity bought will fall and the price will be $30. The quantity bought will fall and the price will be $50. The quantity bought will increase and the price will be $50.
The US, the domestic country, is currently operating a price of $14 per hammer. The US and China are not engaging in international trade. A new treaty is signed, and the world price and domestic price of the product are now $10 per unit. The US producers claim that this new treaty will harm them. The world price of hammers is $10 per hammer before and after the treaty. A. Calculate the consumer surplus before international trade is allowed. Show your work. A. Calculate the consumer surplus after international trade is allowed. Show your work. C. Will the producers in the domestic economy support or argue against opening up to international trade? Briefly explain and support your answer.
Suppose you have the following for white t-shirts market:Market demand is P=125-(3/8)QMarket supply is P=5+(1/8)Q. there is now a global supply that is horizontal at $15. But the government now imposes a tariff of $5 per unit of t-shirt.a. Obviously the world price and domestic price will now be $20. Calculate the quantityproduced and demanded domestically? b. Using graphs show the changes in CS (Consumer Surplus) and PS (Producer Surplus) comparedto Free Trade. Show also the government revenue, which is tariff per t-shirt times the new level of imports. Who gains in comparison to Free Trade scenario? Who loses? What is the welfare gain or loss? Show by using graphs.
Is it good or bad for American consumers when the United states puts tariffs on imports?
When a country opens its markets to international trade, if the world price is ________(lower/higher) than the domestic equilibrium price, quantity supplied from foreign producers will rise.
Tariff on tennis racquets Suppose a country imports tennis racquets. If the government introduces a tariff on tennis racquets, the tariff revenue it collects will exceed the reduction in CS to domestic buyers of racquets. a) true b) false Can someone help me to understand this question? If a tariff is imposed the consumer surplus will be reduced but do we if it will be greater than the revenue the government collects? any help will be appreciated.
am. 111.
Assume Australia is an importer of sofas and there are no trade restrictions. Australian consumers buy 1 000 000 sofas per year, of which 450 000 are produced domestically and 550 000 are imported.a Suppose that a technological advance among Swedish sofa manufacturers causes the world price of sofas to fall by $200. Draw a graph to show how this change affects the welfare of Australian consumers and Australian producers, and how it affects total surplus in Australia.b After the fall in price, Australian consumers buy 1 150 000 sofas, of which 300 000 are produced domestically and 850 000 are imported. Calculate the change in consumer surplus, producer surplus and total surplus from the price reduction.c If the government responded by putting a $200 tariff on imported sofas, what would this do? Calculate the revenue that would be raised and the deadweight loss. Would it be a good policy from the standpoint of Australian welfare? Who might support the policy?d Suppose that the fall in…
х 0 150 $1500 $625 $2800 $865 Price of Calculators $27 12 7 2 300 400 Domestic Supply Domestic Demand World Price Quantity of Calculators The figure above shows the domestic market for calculators in Haiti. What is the change in total surplus in Haiti because of trade?
A small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T- shirt and domestic production rises to 15 million T-shirts per year. The quota on T- shirts causes domestic consumers to A) gain $7 million. B) lose $7 million. C) lose $70 million. D) lose $77 million