Question 3 Table: U.S. Demand for and Supply of Widgets Price $1 Quantity 5 Supplied Quantity Demanded 20 O 0 widgets 2 widgets 4 widgets O 6 widgets $2 6 19 $3 7 18 $4 8 17 $5 9 15 $6 10 14 $7 $8 11 $9 12 13 13 12 11 $10 14 10 The United States can import widgets from China at $4 each and from Mexico at $5 each. The United States imposes a tariff of $2 on each of its widget imports. Suppose that the United States and Mexico form a free- trade area. How much trade in widgets is diverted in the U.S.-Mexican free-trade area?

Question 3 Table: U.S. Demand for and Supply of Widgets Price $1 Quantity 5 Supplied Quantity Demanded 20 O 0 widgets 2 widgets 4 widgets O 6 widgets $2 6 19 $3 7 18 $4 8 17 $5 9 15 $6 10 14 $7 $8 11 $9 12 13 13 12 11 $10 14 10 The United States can import widgets from China at $4 each and from Mexico at $5 each. The United States imposes a tariff of $2 on each of its widget imports. Suppose that the United States and Mexico form a free- trade area. How much trade in widgets is diverted in the U.S.-Mexican free-trade area?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A small country is facing the following domestic supply curve of a product: S = 200 + 20P, as well as the following domestic demand curve of a product: D = 400 - 20P. It can import it at a world price of 10 per unit. In addition, each unit of production yields a marginal social benefit of 10. The effect on welfare of an import tariff of 6 per unit is $. O -420 O 500 O -480 O 420 O 320 -500 O :180 O -320 480 O 180
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