5. Import quotasThe following graph shows the U.S. domestic market for jackets.Use this graph to answer the questions that follow.PRICE (Dollars)2018161412108CD6420048Domestic SupplyDomestic Demand1216 2024 28QUANTITY (Millions of jackets)With no trade, the equilibrium price of a jacket is $supplied equalmillion jackets.32 36 40Domestic DemandDomestic SupplyPrice,(World)Price (Quota)(?)At this price, both the domestic quantity demanded and the domestic quantity Suppose now that the United States trades with China but neither country can affect the world price of jackets. Initially, the United States does notuse any trade barriers (neither tariffs nor quotas) on jackets imported from China. Assume that China has a comparative advantage in producingjackets and charges the world price of $8 per jacket.On the graph, use the grey line (star symbol) to indicate the world price of jackets.At the world price of $8 per jacket, U.S. consumers will demandand the U.S. will importmillion jackets from China.million jackets, U.S. manufacturers will supplySuppose now that the United States imposes a quota on imports of jackets from China, which limits imports of Chinese jackets to 0 million. (Hint: Theoriginal domestic supply curve represents domestic production only.)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 jackets is $demandmillion jackets.per jacket, U.S. producers supplyCompared to conditions under free trade, U.S. manufacturers selljacket quota, while U.S. consumers buyjackets and payjackets and receivemillion jackets,million jackets, and U.S. consumersprice after the imposition of theprice after the imposition of the jacket quota.Supporters of the jacket quota over free trade argue that the trade restriction will save jobs in the United States. What are the potential pitfalls ofsuch an argument? Check all that apply.The costs to domestic jacket consumers may outweigh the benefits of jobs saved in the jacket 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.Consumers will likely divert large amounts of scarce resources toward lobbying for the removal of the quota.

As per the guidelines we are allowed to answer the first three subparts only. Please post the…

Suppose now that the United States trades with China but neither country can affect the world price of jackets. Initially, the United States does not use any trade barriers (neither tariffs nor quotas) on jackets imported from China. Assume that China has a comparative advantage in producing jackets and charges the world price of $8 per jacket. On the graph, use the grey line (star symbol) to indicate the world price of jackets. At the world price of $8 per jacket, U.S. consumers will demand and the U.S. will import million jackets from China. million jackets, U.S. manufacturers will supply million jackets,

Suppose now that the United States trades with China but neither country can affect the world price of jackets. Initially, the United States does not use any trade barriers (neither tariffs nor quotas) on jackets imported from China. Assume that China has a comparative advantage in producing jackets and charges the world price of $8 per jacket. On the graph, use the grey line (star symbol) to indicate the world price of jackets. At the world price of $8 per jacket, U.S. consumers will demand and the U.S. will import million jackets from China. million jackets, U.S. manufacturers will supply million jackets,

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

5. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Guatemala. Guatemala is open to international trade of soybeans without any restrictions. The world price (Pw) of soybeans is $525 per ton and is represented by the horizontal black line. Throughout this problem, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per ton) 840 805 770 735 700 665 630 595 560 525 490…
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 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 0 ▬▬▬‒‒‒‒ 0 50 SK 100 150 200 250 300 350 QUANTITY (Thousands of tons) D₂ K 400 Pw W 450 500 Sk+Q Price with Quota A Change…
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 0 0 50 SK Pw W 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of tons) SK+Q Price with Quota A Change in PS Quota…
Consider a simplified example of two countries - Singapore and Indonesia - producing two goods – telecommunications equipment and electrical circuit apparatus. Using all its resources, Singapore can produce either 50 telecommunications equipment, or 100 electrical circuit apparatus. Using all its resources, Indonesia can produce either 1,000 telecommunications equipment, or 5,000 circuit apparatus. (a) Which country/countries has/have the absolute advantages and the comparative advantages in the production of telecommunications equipment, and of electrical circuit apparatus? Explain and show. (b) Consider the case of constant opportunity cost. What will be the resulting patterns of trade, terms-of-trade, and the aggregate production and consumption? Provide a diagram to illustrate, with telecommunications equipment on the y-axis. (c) It is found that contrary to the above, there is no complete specialisation in both Singapore and Indonesia. Instead, Singapore partially specialises in…
The United States has historically imposed import tariffs on goods that include tobacco, canned tuna, steel, and aluminum. Suppose the market for tobacco is illustrated by the accompanying graph. a. As shown, the world price is $2 per pound. Suppose the U.S. imposes a tariff of $1 per pound. Adjust the price line labeled "World price with tariff" (at the top of the graph) to reflect this tariff. b. Use the letters and values in the graph to fill in the following table. Without tariff With import tariff Price Quantity demanded Quantity supplied Domestic consumer surplus Domestic producer surplus Government revenue Total economic surplus c. If the government decides to replace the tariff with a quota that will have the same effect on the market as the tariff, the quota should restrict imports to____________________( 1million pounds, 2 million…
Suppose Canada can produce cars at an opportunity cost of 2 computers for each car it produces. Suppose Mexico can produce cars at an opportunity cost of 8 computers for each car it produces. Indicate how both countries can gain from free trade.
Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces pistachios will produce. million pounds per day and the country that produces chinos will produce million pairs per day.
Price of Clothing Market for Clothing in Vietnam Domestic Demand Quantity of Clothing Domestic Supply World Price A Consumer Surplus Producer Surplus
Suppose a large country A initially imposed a tariff on its imports and is now considering removing its tariff. Use a domestic-market graph to a) show the effect of country A’s tariff removal on the world’s price, country A’s import price, import quantity, consumer surplus, producer surplus, and government revenue. b) identify country A’s net welfare change as a result of its tariff removal. Is country A unambiguously better off? c) Use a different graph to show how foreign producers will be affected by country A’s tariff removal? d) What factor determines the level of optimal tariff for country A? Please make sure to graph fpr both parts "a" and "c"
Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula = 3 cans tuna fish Tunata: 1 can baby formula = 5 cans tuna fish a. In what product should each nation specialize? Canswicki should produce [(Click to select), and Tunata should produce [(Click to select) ♥ b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula = 2 cans tuna fish: (Click to select) ii. 1 can baby formula = 3.5 cans tuna fish: (Click to select) iii. 1 can baby formula = 6 cans tuna fish: (Click to select)
Based on the information from the previous graph, absent international trade total surplus is $ The following graph shows the same domestic supply and demand curves for melons in Bangladesh. Now, suppose that the Bangladeshi government changes its stance on international trade, deciding to allow free trade in melons. The horizontal black line (Pw) represents the world price of melons at $500 per ton. Assume that Bangladesh's entry into the world market for melons has no effect on the world price and there are no transportation or transaction costs associated with international trade in melons. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the green triangle (triangle symbol) to shade in the area representing consumer surplus, and then use the purple triangle (diamond-symbol) to shade in the area representing producer surplus. PRICE (Dollars per ton) 660 Domestic Demand Domestic Supply 620 580 540…
If Indonesia (which is a small country) imposes an import tariff on textile imports, we can conclude that:(a) The world price of textile rises, and Indonesia imports less.(b) The world price of textile stays constant, and Indonesia imports less.(c) The world price of textile falls, and Indonesia imports less.(d) The world price of textile stays constant, and Indonesia imports the same as before. Explain why.