S D Q (b) Copy and correctly label the diagram to the left indicating the values of (i) the world price, (ii) the quantities supplied and demanded at the world price, (iii) the amount of imports at the world price and (iv) the quota amount. (c) Calculate (i) the increase in the domestic price, (ii) the quota rents, (iii) total deadweight loss and (iv) the gain to domestic rice producers.

S D Q (b) Copy and correctly label the diagram to the left indicating the values of (i) the world price, (ii) the quantities supplied and demanded at the world price, (iii) the amount of imports at the world price and (iv) the quota amount. (c) Calculate (i) the increase in the domestic price, (ii) the quota rents, (iii) total deadweight loss and (iv) the gain to domestic rice producers.

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

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 Price (€ per cap) 10 X 10 20 30 40 50 60 70 80 90 100 9 8 7 5 3 2 1 0 Sd Dd
The figure below shows the hypothetical domestic supply and demand for baseball caps In the country of Spaln. Domestic Supply and Demand for Baseball Caps Spain 10 9. 8. 1 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps is €3 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 domestc consumers? 10 O thousand b. What quantity of baseball caps will be Imported? 80 thousand Now suppose a tariff of €2 is levied agalnst each Imported baseball cap. C. After the taniff is Implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? 20 thousand d. After the tariff Is Implemented, what quantity of baseball caps will be Imported? 60 thousand Price (€ per cap)
Suppose the domestic price of wheat is $3.50 per bushel in Canada, while the world price is $4.00 per bushel. Assuming no transportation costs, Canada will: O have a domestic shortage of wheat. O import wheat. Ⓒexport wheat. O neither export nor import wheat.
3. The world price of sugar is $.10 per lb., but import quotas raise the U.S. price to $.225 per lb. a. Compute the tariff equivalent of the quota (as a percent of the world price). b. Due to the high price of sugar in the U.S., high fructose corn sweetener emerges as an economic substitute for sugar. As a result it is expected that the demand for sugar will fall over time. From the perspective of the U.S. sugar industry, are they better off with tariff protection, or a quota which is equivalent today, but which stays fixed over time? Explain using a supply and demand diagram in your answer.
Domestic Supply and Demand for Baseball Caps Spain 10 8. 7. 4 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? 10 thousand b. What quantity of baseball caps will be imported? 80 thousand Now suppose a tariff of €1 is levied against each imported baseball cap. c. After the tarif is implemented, what quantily of baseball caps will domestic suppliers supply to domestic consumers? 30 thousand d. After the tariff is implemented, what quantity of baseball caps will be imported? 40 thousand Price (€ per cap) 3.
1. Andorra is a small country, incapable of affecting world prices. It imports peanuts at the world price of 10 cents per sack. Andorra's demand for peanuts is given by: D = 400– 10P. Andorra's supply curve for peanuts is: S = -20 + 5P. Determine the equilibrium under free trade. a) Calculate and show in a diagram the following effects of a quota that limits the import of peanuts to 60 sacks. · The increase in the domestic price. · The quota revenue. · The loss due to production distortion. · The loss due to consumption distortion. b) Could the Government of Andorra have achieved the same trade result using a tariff?
If the government of brazil allows free trade and the world price is $10, then
Assume that there are only two countries in the world: Venezuela and the U.S. Venezuela's demand curve for oil drilling rigs is (all prices are in millions of U.S. dollars): Qd = 440-20 P Its supply curve is: Qs 120 +30P a) Derive Venezuela's import demand schedule. What would the price of oll drilling rigs in the absence of trade be?"
If the United States were to lift existing tariffs on steel imports: Question 32 options: A.the supply of steel shifts to the right and lowers its market price. B.the demand for steel shifts to the right. C.the supply of the imported steel shifts to the left and raises its market price. D.the demand for steel shifts to the left and raises its market price. Please type out the correct step by step answer with proper explanation of the each option given within 40 50 minutes . Will give you thumbs up only for the correct answer. Thank you .
3. Import quotas 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. 4000 PRICE (Dollars perton) 3800 3200 2800 2400 2000 1000 1200 800 0 0 St 80 120 160 200 240 200 320 360 QUANTITY (Thousands of tons) Pw SK+Q Price with Quota A Change in…
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…
3. Import quotas 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 DK 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 160,000 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 160,000 apples. PRICE (Dollars per ton) 1000 900 800 700 600 500 400 300 200 100 0 0 40 SK + D K P W 80 120 160 200 240 280 320 380 400 QUANTITY (Thousands of tons) SK+Q The equivalent…