On the previous graph, use the purple line (diamond symbol) to indicate the new U.S. price under the quota.Under the quota, the price of towels is squantity demanded by U.S. consumers isthe quantity supplied by U.S. producers ismillion towels.Compared to conditions under free trade, U.S. manufacturers sellquota, while U.S. consumers buytowels and paymillion towels, and thetowels and receiveprice after the imposition of the towel quota.price after the imposition of the towelSupporters of the towel quota over free trade argue that the trade restriction will save jobs in the United States. What are the potential pitfalls of suchan argument? Check all that apply.Consumers will likely divert large amounts of scarce resources toward lobbying for the removal of the quota.The costs to domestic towel consumers may outweigh the benefits of jobs saved in the towel industry.China may retaliate, imposing restrictions on exports from the United States, thereby generating unemployment in U.S. exportindustries.Trade restrictions simply reshuffle jobs by increasing employment in the protected industry and reducing employment in other industries. 7. Effect of quotas on local consumers and producersThe following graph shows the U.S. domestic market for towels.PRICE (Dollars)20181614୯1210bo4200Domestic Demand12Domestic Supply2436QUANTITY (Millions of towels)4860In the absence of foreign trade, the equilibrium price of a towel is sdomestic quantity supplied equalmillion towels.Price (World)Price(Quota). At this price, both the domestic quantity demanded and theSuppose that trade between the United States and China is open and that the United States initially imposes no tariffs or quotas on towels importedfrom China. Assume that China has a comparative advantage in producing towels and charges the world price of $6 per towell. (Note: Throughout theproblem, assume that the amount demanded by any one country does not affect the world price of towels.)On the previous graph, use the grey line (star symbol) to indicate the world price of towels.At the world price of $6 per towel, the quantity of towels demanded by U.S. buyers ismanufacturers ismillion towels, and the quantity of towels imported from China ismillion towels, the quantity of towels supplied by U.S.million towels.Suppose now that the United States places a quota on imports of towels from China, which limits imports of Chinese towels to 12 million. (Hint: Theoriginal domestic supply curve represents domestic production only.)

Free trade is the unrestricted importing and exporting of goods and services between countries. A…

In the absence of foreign trade, the equilibrium price of a towel is domestic quantity supplied equal million towels. . At this price, both the domestic quantity demanded and the Suppose that trade between the United States and China is open and that the United States initially imposes no tariffs or quotas on towels imported from China. Assume that China has a comparative advantage in producing towels and charges the world price of $6 per towel. (Note: Throughout the problem, assume that the amount demanded by any one country does not affect the world price of towels.) On the previous graph, use the grey line (star symbol) to indicate the world price of towels. At the world price of $6 per towel, the quantity of towels demanded by U.S. buyers is manufacturers is million towels, the quantity of towels supplied by U.S. million towels. million towels, and the quantity of towels imported from China is

In the absence of foreign trade, the equilibrium price of a towel is domestic quantity supplied equal million towels. . At this price, both the domestic quantity demanded and the Suppose that trade between the United States and China is open and that the United States initially imposes no tariffs or quotas on towels imported from China. Assume that China has a comparative advantage in producing towels and charges the world price of $6 per towel. (Note: Throughout the problem, assume that the amount demanded by any one country does not affect the world price of towels.) On the previous graph, use the grey line (star symbol) to indicate the world price of towels. At the world price of $6 per towel, the quantity of towels demanded by U.S. buyers is manufacturers is million towels, the quantity of towels supplied by U.S. million towels. million towels, and the quantity of towels imported from China is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The figure below shows the hypothetical domestic supply and demand for baseball caps in the country of Spain. Domestic Supply and Demand for Baseball Caps Spain 10 9. 8. 7 3 2 1 Da 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps consumers are indifferent between domestic and imported baseball caps. €3 and there are no import restrictions on this product. Assume that Spanish Instructions: Enter your answers as whole numbers. a. What quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand b. What quantity of baseball caps will be imported? thousand Now suppose a tariff of €2 is levied against each imported baseball cap. C. After the tariff is implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand d. After the tariff is implemented, what quantity of baseball caps will be imported? thousand Price (€ per cap)
Price P1 D 01 Quantity The graph above shows domestic supply and demand with trade in a SMALL country. With trade, this country can purchase at the world price, Pw. Suppose that this country imposes a $5 per unit tariff on this good. Which of the following is true? O There will not be deadweight losses due to this tariff, since it is a small country. The domestic price will rise by $5. O Consumers will be better off. Producers will not increase domestic production.
Consider the market for coffee in the small, isolated country of Krakozhia. Within Krakozhia, the domestic demand for coffee is: Q = 500-2p and the domestic supply of coffee is: Q* = -150+ 3p
Consider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply for steel in this country. One of the two price lines represents the world price of steel. ecause this country exports steel, the world price is represented by . Suppose that a “pro-trade” government decides to subsidize the export of steel by paying $10 for each ton sold abroad. With this export subsidy, the price paid by domestic consumers is per ton, and the price received by domestic producers is per ton. The quantity of steel consumed by domestic consumers , the quantity of steel produced by domestic producers , and the quantity of steel exported . True or False: With the export subsidy, domestic producers will sell steel to domestic consumers and sell the rest abroad. True False Under the export subsidy, consumer surplus is and producer surplus is . Government revenue by (increases or Decreases) . As a…
[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.] [Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences. How to draw the graph?
US imports of sugar are subject to a quota. Although rounded up, the figures used in this exercise are close to reality. Thanks to the quota, US production of sugar is 6 million ton/year, instead of 5 million without the quota, and US consumption of sugar is 8 million ton/year, instead of 9 million without the quota. The US consumer pays $480/ton, whereas the world price is $280/ton. a) Easy: What is the volume of the quota? b) Easy: Why is the US price higher with the quota? c) Medium: Can you plot US supply and demand curves? Show graphically the impact of the quota for consumers and producers.
The following graph shows the domestic supply of and demand for maize in Burundi. The world price (Pw) of maize is $270 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 450 Domestic Demand Domestic Supply 430 410 390 370 350 330 310 290 P 270 250 40 80 120 180 200 240 280 320 360 400 QUANTITY (Tons of maize) If Burundi is open to international trade in maize without any restrictions, it will import tons of maize. Suppose the Burundian government wants to reduce imports to exactly 160 tons of maize to help domestic producers. A tariff of per ton will achieve this. A tariff set at this level would raise $ in revenue for the…
“The U.S. and Mexico can gain from trade with one another by taking advantage of the low cost of producing microchips in the U.S and the low cost of producing brooms in Mexico. The cost of producing one broom in U.S is 9 microchips. In Mexico the cost of producing a broom is only 1/9 microchips. If the U.S. produces microchips and imports brooms, and if Mexico produces brooms and imports microchips, both countries will gain from trade because they‟ll each produce the good they can produce more cheaply and import the good that the other country produces more cheaply. Note that the U.S. has an absolute advantage in the production of microchips while Mexico has an absolute advantage in the production of brooms.” In context of International Business and Trade the above example of US and Mexico focuses on absolute advantage. Explain the theory of absolute advantage and comparative advantage and also how nation states are competing to gain advantage over each other.
Assume that the weekly domestic demand for petroleum is represented by the equation: P= -2.25Q + 600. And, the weekly domestic supply of petroleum is represented by the equation: P= 1.5Q + 25. Assume also, that the world price of petroleum is $200. What is the domestic autarky price and quantity when this economy is closed to trade? What would be the total quantity of petroleum demanded when the economy is open to international trade? What would be the volume of imports when the economy is open to trade? What is the import dependency ratio in this economy when it is open for international trade in petroleum?
5. Welfare effects of a tariff in a small còuntry Suppose Burundi is open to free trade in the world market for malze. Because of Burundl's small size, the demand for and supply of malze in Burundi do not affect the world price. The followling graph shows the domestic malze market in Burundi. The world price of malze Is Pw =$350 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer's surplus (CS) when the economy is at the free-trade equllibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producers' surplus (PS). 710 Domestic Demand Domestic Supply 670 CS 630 590 550 PS 510 W 470 430 390 350 310 3 9 12 15 18 21 24 27 30 QUANTITY (Thousands of tons of maize) If Burundi allows international trade in the market for maize, it will import tons of maize. Now suppose the Burundian government decides to impose a tariff of $40 on each imported ton of maize. After the tariff, the price Burundian…
The following graph shows the domestic supply of and demand for maize in Panama. The world price (Pw) of maize is $250 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 475 450 425 400 375 350 325 300 275 250 225 Domestic Demand 0 10 20 Domestic Supply 30 40 50 60 70 QUANTITY (Tans of maize) PW A tariff set at this level would raise $ 80 90 100 If Panama is open to international trade in maize without any restrictions, it will import Suppose the Panamanian government wants to reduce imports to exactly 20 tons of maize to help domestic producers. A tariff of $ achieve this. tons of maize. in revenue for the…
Assume that Canada is an importer of televisions and that there are no trade restrictions. Canadian consumers buy 1.2 million televisions per year, of which 600,000 are produced domestically and 600,000 are imported. Suppose that a technological advance among Japanese television manufacturers causes the world price to fall $800 to $700. Draw a graph to show how this change affects the welfare of Canadian consumers and Canadian producers and how it affects total surplus in Canada. Label the diagram carefully to show all the areas using letters of alphabets. (Do not shade the areas). After the fall in price, consumers buy 1.4 million televisions, of which 400,000 are produced domestically and 1 million are imported. Calculate the change (this will be only the area either gained or lost by consumers and producers) in consumer surplus, producer surplus and total surplus due to price reduction. Provide numerical answers by calculating the area of change in surplus due to fall in…