Kazakhstan is an apple producer, as well as an importer of apples. Suppose the following graph shows Kazakhstan's domestic market for apples, whereSK is the supply curve and Dx is the demand curve. The free trade world price of apples (Pw) is $200 per ton. Suppose Kazakhstan's governmentrestricts imports of apples to 200,000 tons. The world price of apples is not affected by the quota. Analyze the effects of the quota on Kazakhstan'swelfare.On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as astraight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) toindicate the new price of apples with a quota of 200,000 apples.PRICE (Dollars per ton)10009008007006005004003002001000050SKPwW100 150 200 250 300 350 400 450 500QUANTITY (Thousands of tons)SK+QPrice with QuotaAChange in PSQuota RentsDWL(?) In the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus(PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quotarents. Finally, use the black areas (plus symbol) to indicate the deadweight loss (DWL) resulting from the quota's consumption and protective effects.The equivalent import tariff for Kazakhstan's apple import quota is $per ton of apples.If Kazakhstan's government auctions off the quota licenses in a well-organized, competitive auction, Kazakhstan experiences a deadweight loss of(Hint: Select a shaded region to see its area. Be sure to adjust for the units on the quantity axis.)$

A deadweight loss implies to cost to society made by market inefficiency, which happens when supply…

Kazakhstan is an apple producer, as well as an importer of apples. Suppose the following graph shows Kazakhstan's domestic market for apples, where SK is the supply curve and Dx is the demand curve. The free trade world price of apples (Pw) is $200 per ton. Suppose Kazakhstan's government restricts imports of apples to 200,000 tons. The world price of apples is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of apples with a quota of 200,000 apples. PRICE (Dollars per ton) 1000 900 800 700 600 500 400 300 200 100 SK K Pw W SK+Q Price with Quota A Change in PS Quota Rents [] (?)

Kazakhstan is an apple producer, as well as an importer of apples. Suppose the following graph shows Kazakhstan's domestic market for apples, where SK is the supply curve and Dx is the demand curve. The free trade world price of apples (Pw) is $200 per ton. Suppose Kazakhstan's government restricts imports of apples to 200,000 tons. The world price of apples is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of apples with a quota of 200,000 apples. PRICE (Dollars per ton) 1000 900 800 700 600 500 400 300 200 100 SK K Pw W SK+Q Price with Quota A Change in PS Quota Rents [] (?)

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

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Kazakhstan is an apple producer, as well as an importer of apples. Suppose the following graph shows Kazakhstan's domestic market for apples, where Sx is the supply curve and Dx is the demand curve. The free trade world price of apples (Pw) is $200 per ton. Suppose Kazakhstan's government restricts imports of apples to 120,000 tons. The world price of apples is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of apples with a quota of 120,000 apples. PRICE (Dollars perton) 1000 900 800 700 000 500 400 300 200 -- 100 D 0 30 00 90 120 160 Sk 180 210 240 270 300 5x+Q -- Price with Quota Change in PS Quota Rents DWL
Kazakhstan is an apple producer, as well as an importer of apples. Suppose the following graph shows Kazakhstan's domestic market for apples, where SK is the supply curve and D is the demand curve. The free trade world price of apples (Pw) is $200 per ton. Suppose Kazakhstan's government restricts imports of apples to 200,000 tons. The world price of apples is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of apples with a quota of 200,000 apples.
Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and DK is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 60,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota Sk+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 60,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 20 SK K P W 40 60 80 100 120 140 160 180 200 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for…
Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and Dk is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 120,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 120,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 40 80 120 160 200 SK 240 10 0² W 280 320 360 400 SK+Q Price with Quota A Change in PS Quota Rents DWL ?
The graph above is the U.S. market for some imported good. Supply is a flat curve. The U.S. can import the Chinese good for $40 and the Mexican good for $48. Assume the U.S. imposes $10 tariffs on each unit of the imported good. What will be the quantity imported? From which country? How your answer will change if the U.S. keep the $10 tariffs but join a trade bloc with Mexico? Will the country’s wellbeing increase or decrease? By how much (hint find the change in consumer surplus and the change in government revenue)? Explain your answers.
Suppose that the United States currently both produces kumquats and imports them. The U.S. government then decides to restrict international trade in kumquats by imposing a quota that allows imports of only six million pounds of kumquats into the United States each year. The figure shows the results of imposing the quota. Fill in the following table (enter all numeric responses rounded to the nearest penny for prices and as whole numbers for quantities). Without With Quota Quota World price of kumquats S U.S. price of kumquats $ Quantity supplied by U.S. million firms Quantity demanded million million million million 교차 Quantity imported million Area of consumer ▼ surplus Area of domestic ▼ ▼ producer surplus Area of deadweight loss V Price ($ per lb.) $1.75 1.50- of A C D HI B E J K 15 16 Q (millions of lbs.) Sus Du.s. 880
The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $20 and the equilibrium quantity is 3 million T-shirts. One day, after reading Adam Smith's The Wealth of Nations while on vacation, the president decides to open the Textilian market to international trade. The market price of a T-shirt falls to the world price of $16. The number of T-shirts consumed in Textilia rises to 4 million, while the number of T-shirts produced declines to 1 million. If the domestic demand curve and domestic supply are both linear, the resulting increase in the total surplus in the Textilian T-shirt market is about Zero dollars $6 million $14 million) $4 million $12 million $8 million
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 Sa 8 X 2 1 0 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps is €1 and there are no Import restrictions on this product. Assume that Spanish consumers are indifferent between domestic and Imported baseball caps. 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 €3 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) 65 3₂
On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 120,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 Q1200 800 400 0 0 40 S. K D K Pw 80 120 160 200 240 280 320 360 400 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for Kazakhstan's grape import quota is $ Price with Quota A Change in PS Quota Rents DWL (?) In the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus (PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quota rents. Finally, use the black areas (plus symbol) to indicate…
The nation of textilia Does not allow imports of clothing. In it’s equilibrium Without trade, a T-shirt cost $24, and the equilibrium quantity is 4 million T-shirts. One day, after reading Adam Smith’s ‘The wealth of Nations’ While on vacation, the president decides to open the textilian market to international trade. The market price of a T-shirt falls to the world price of $16. The number of T-shirts consumed in textilia arises to 8 million, while the number of T-shirts produced declines to 2 million.
The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $20, and the equilibrium quantity is 3 million T-shirts. After reading Adam Smith’s The Wealth of Nations while on vacation, the president decides to open the Textilian market to international trade. The market prices of a T-shirt falls to the world price of $16. The number of T-shirts consumed in Textilia rises to 4 million, while the number of T-shirts produced declines to 1 million. Illustrate the situation just described in a graph. Your graph should show all the numbers. Calculate the change in consumer surplus, producer surplus, and total surplus that results from opening trade. (Hint: Recall that the area of a triangle is ½ x base x height.)
In an effort to protect its domestic pear production, the Kingdom of Genovia decides to place an import tariff on pears. Which of the following correctly explains the tariff’s effect on domestic demand? Choice 1 of 4:The tariff will raise domestic prices and decrease the quantity demanded.Choice 2 of 4:The tariff will raise domestic prices and cause the demand curve to shift left.Choice 3 of 4:Tariffs do not impact the domestic quantity demanded.Choice 4 of 4:The tariff will lower domestic prices and increase the quantity demanded.