Refer to Figure 1. Figure 1. Partial equilibrium analysis of trade in bananas Nation 1 World Market P/Pe Nation 2 Pb/Pc P2 A' XS Pw MD PI D' Qd QB Bananas Q's Q'd Bananas Bananas O1 The partial equilibrium analysis shows that the trade volume, Nation 1's 1) exports, and Nation 2' imports of bananas are equal. O 2) The partial equilibrium analysis shows that the trade volume of bananas is less than Nation 1's exports but more than Nation 2' imports. O 3) The partial equilibrium analysis shows that the trade volume of bananas is more than Nation 1's exports but less than Nation 2' imports. 4) The partial equilibrium analysis shows that the trade volume, Nation 1's exports, and Nation 2' imports of bananas are different.

Refer to Figure 1. Figure 1. Partial equilibrium analysis of trade in bananas Nation 1 World Market P/Pe Nation 2 Pb/Pc P2 A' XS Pw MD PI D' Qd QB Bananas Q's Q'd Bananas Bananas O1 The partial equilibrium analysis shows that the trade volume, Nation 1's 1) exports, and Nation 2' imports of bananas are equal. O 2) The partial equilibrium analysis shows that the trade volume of bananas is less than Nation 1's exports but more than Nation 2' imports. O 3) The partial equilibrium analysis shows that the trade volume of bananas is more than Nation 1's exports but less than Nation 2' imports. 4) The partial equilibrium analysis shows that the trade volume, Nation 1's exports, and Nation 2' imports of bananas are different.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. Welfare effects of a tariff in a small country Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw=$250 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 equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producers' surplus (PS). PRICE (Dollars per ton) 490 460 430 400 370 340 310 280 250 220 190 + 0 Domestic Demand 5 Domestic Supply 10 15 20 25 30 35 QUANTITY (Thousands of tons of wheat) 40 P 50 If Kenya allows international trade in the market for wheat, it will import Show the effects of the $60 tariff on the following graph. CS PS tons of wheat. Now suppose the Kenyan government decides to impose a tariff of $60…
Based on Figure 1, choose the correct statement. Assume that Nation 2 a small country and imposes a tariff on imports of X. Figure 1. Partial equilibrium analysis effects of a tariff in Nation 2 P,($) Ars 0 |A C 10 J 'M *- 20 30 40 50 60 D, 70 80 1) Nation 2 faces a perfectly inelastic import supply at the world price of Pw = 2 and it can import any quantity of X. 2) Nation 2 faces a perfectly elastic import supply at the world price of Pw = 2 and it can import any quantity of X. 3) Nation 2 faces a perfectly elastic export supply at the world price of Pw = 1 and it can import any quantity of X. 4) Nation 2 faces a perfectly inelastic export supply at the world price of Pw = 1 and it can import any quantity of X.
3. Welfare effects of a tariff in a small country Suppose Bangladesh is open to free trade in the world market for maize. Because of Bangladesh's small size, the demand for and supply of maize in Bangladesh do not affect the world price. The following graph shows the domestic maize market in Bangladesh. The world price of maize is Pw=$350 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 710 670 630 500 550 510 470 430 300 350 310 Domestic Demand 10 Domestic Supply 10 QUANTITY (Thousands of tons of maize) 18 20 8 PS
O 1) The offer curves show that at point E, import demand is more than export supply of bananas. (2) The offer curves show that at point E, import demand equal export supply of bananas. (3) The offer curves show that at point F, import demand equal export supply of bananas. 4) The offer curves show that F is a balanced trade point. Figure 4 Offer curves of Nation 1 and Nation 2 Corn PA' = 4 PF' = 2 PB = PB' = 1 E 50 30 0 F' E' F 30 50 PF = 1/2 PA = 1/4 Bananas (tons)
Question 9 Figure 7-2 Price (dollars per pound) $3.00 2.50 1.75 0.50 12 18 26 38 45 O $11.25 million. O $18 million. U.S. Supply Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 7- 2 shows the impact of this tariff. O $32.5 million. Pw+tariff World price (P Refer to Figure 7-2. The increase in domestic producer surplus as a result of the tariff is equal to O $45 million. U.S. Demand Quantity of coffee (millions of pounds)
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Suppose that France and Germany both produce wine and cheese. The table below shows combinations of the goods that each country can produce in a day. France Germany Wine (Bottles) Cheese (Pounds) 16 Wine (Bottles) Cheese (Pounds) 12 8. 4. 25 20 15 2 3 3 4 10 4 Who has the comparative advantage in producing wine and who has the comparative advantage in producing cheese? O A. France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese. O B. France has a comparative advantage producing wine and cheese. OC. Germany has a comparative advantage producing wine and cheese. -OD. Neither has a comparative advantage producing wine or cheese. OE. France has a comparative advantage producing cheese and Germany has a comparative advantage producing wine. Suppose that France is currently producing 1 bottle of wine and 12 pounds of cheese and Germany is currently producing 3 bottles of wine and 10 pounds of cheese. Then, assume instead that France and…
5. Free-trade benefits In addition to the positive welfare effects that free trade has on an economy, there are a variety of other benefits of international trade. Consider the following scenario: Because of international trade, poorer countries are able to learn about technological advances made by other countries rather than investing scarce resources in developing advanced technology themselves. The previous scenario represents which of the following benefits of free trade? O Increased variety of goods O Increased competition O Lower costs through economies-of scale O An enhanced flow of ideas
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Suppose Italy has the comparative advantage in producing wine and Germany has the comparative advantage in producing machine tools. Suppose further that each country produces both goods when operating in autarky. When the countries move from autarky to mutually beneficial trade, profits in the German machine tool industry will ,everything else held constant. Select one: O A. decrease O B. be ambiguous O C. remain unchanged D. increase