Suppose that the world price of a pair of pants is $60, so domestic producers will export some of the pants they produce. According to the figure, the total domestic economic surplus (which includes producer and consumer surplus) in the free-trade equilibrium will be the total domestic economic surplus without trade. The difference will be Price 100 Domestic supply 50 Domestic demand 90 100 ) Quantity (in thousands) 10 20 30 40 50 60 70 80 Select one: a. less than; $200,000 b. greater than; $200,000 C. greater than; $100,000 d. less than; $100,000

Suppose that the world price of a pair of pants is $60, so domestic producers will export some of the pants they produce. According to the figure, the total domestic economic surplus (which includes producer and consumer surplus) in the free-trade equilibrium will be the total domestic economic surplus without trade. The difference will be Price 100 Domestic supply 50 Domestic demand 90 100 ) Quantity (in thousands) 10 20 30 40 50 60 70 80 Select one: a. less than; $200,000 b. greater than; $200,000 C. greater than; $100,000 d. less than; $100,000

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

3. A local economy's market demand for drones is given by Q® = 24 - 4P while supply is given by Q5 = 8P. Assume that domestic and world economic conditions were such thạt the local economy started exporting drones. What is the effect of drone exports on local economy's produćer surplus, consumer surplus and total surplus? Suppose instead that domestic and world economic conditions change such that it makes more sense for the local economy to start importing drones. What is the effect of drone imports on the local coconomy's producer surplus, consumer surplus and total surplus?
If the government of brazil allows free trade and the world price is $10, then
Q3: Using a domestic-market demand- and supply-curve graph, show the impact of tariff on a small country's import price, domestic demand, domestic supply, import quantity, consumer surplus, producer surplus, government revenue, and total welfare; Is the country unambiguously worse off as a result of the tariff? In the same graph, show how to achieve the same import quantity with an import quota; When would the tariff and the import quota lead to the same amount of welfare change? How will the answer to (a) and (b) change if the country uses a subsidy that is equivalent to the tariff rate to help domestic producers? How would the answers to (a) and (b) change for a large country? Your answer:
. The United States currently imports all of its coffee. The annual demand for coffee by U.S. consumers is given by the demand curve Qd = 150 − 10P, where Qd is quantity (in millions of pounds) and P is the market price per pound of coffee. Suppose the domestic supply is Qs = 10P −50. The U.S. coffee market is competitive. Suppose that the world price of coffee is $6. Congress is considering a tariff on coffee imports of $2 per pound. (a) Find the producer and consumer surplus if there was no trade. (b) Calculate the consumer and producer surplus after we engage in free trade. (c) If the tariff is imposed calculate the changes to consumer and producer surplus. (d) Other than lower prices, provide two benefits that can occur as a result of free trade.
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…
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
Referring to the graph above, if the world price is $8, consumer surplus (relative to the no trade situation): A. Increases by $60, and producer surplus decreases by $120 B. Increases by $80, and producer surplus increases by $80 C. Decreases by $60, and producer surplus decreases by $80 D. Decreases by $80, and producer surplus increases by $120
In Italy, the domestic market demand for rice is P = 100-2Q, and the domestic market supply of rice is P = 10 + Q. If the world price of rice is 20, how will consumer surplus change when Italy goes from autarky to be open to trade? It will decrease by 1200. It will increase by 700. It will decrease by 700. It will increase by 1200.
Lesson 12 Question 6
On the following graph, use the green point (triangle symbol) to shade consumer surplus in Cambodia after China's clothing industry expands. Then use the purple point (diamond symbol) to shade producer surplus. Market for Clothing in Cambodia Domestic Demand Consumer Surplus Domestic Supply New World Price Producer Surplus Quantity of Clothing Price of Clothing
Suppose the United States producers of rice convince the government to place a quota on (or to restrict entirely) the import. a. What is the effect on U.S. producers of rice? b. What is the effect on U.S. consumers of rice? c. What is the effect on the foreign producers of rice?
2