The diagram shows export tax by a large country in perfect competition. The graph shows the effect of export tax by a large country under perfect competition. The graph shows price on the vertical axis and output on the horizontal axis. It has three curves: 1) a downward sloping world demand curve labeled "D" +Dw". 2) a downward sloping domestic demand curve labeled "D" that starts at the same point on the vertical axis as the world demand curve but has a steeper slope than the world demand curve. 3) an upward sloping supply curve (Supply). At the point where the supply curve and the world demand curve intersect, price equals $9 (the free-trade price) and the quantity supplied equals 30. The new international price under export tax, pw2, equals $12. The price that consumers pay under export tax equals, pw2-t, equals $7. When price is $9, the quantity supplied equals 30 and the quantity demanded domestically equals 10. When price is $7, the supplied equals 25 and the quantity domestically demanded equals 15. Price p2-$12 P = $9 p2-t-S7 1)-$25 2) $65 3) -$85 10 4) $25 15 25 5) None of the above 30 D4 diagram, the change in consumer surplus due to the export tax equals Supply X D+D Based on the

The diagram shows export tax by a large country in perfect competition. The graph shows the effect of export tax by a large country under perfect competition. The graph shows price on the vertical axis and output on the horizontal axis. It has three curves: 1) a downward sloping world demand curve labeled "D" +Dw". 2) a downward sloping domestic demand curve labeled "D" that starts at the same point on the vertical axis as the world demand curve but has a steeper slope than the world demand curve. 3) an upward sloping supply curve (Supply). At the point where the supply curve and the world demand curve intersect, price equals $9 (the free-trade price) and the quantity supplied equals 30. The new international price under export tax, pw2, equals $12. The price that consumers pay under export tax equals, pw2-t, equals $7. When price is $9, the quantity supplied equals 30 and the quantity demanded domestically equals 10. When price is $7, the supplied equals 25 and the quantity domestically demanded equals 15. Price p2-$12 P = $9 p2-t-S7 1)-$25 2) $65 3) -$85 10 4) $25 15 25 5) None of the above 30 D4 diagram, the change in consumer surplus due to the export tax equals Supply X D+D Based on the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The U.S. is an importer of ethanol, and let’s assume they are a price-taker in the world market. Suppose that a technological advance in ethanol production in Brazil, the world’s largest exporter, drives down the world price of ethanol by $5. Draw a graph and explain how this change in world price affects consumer surplus, producer surplus, and total surplus in the U.S. market. Now suppose the U.S. government institutes an import tariff of $5 in response to the fall in the world price. On your graph label the revenue raised by the tariff and the deadweight loss created (if it exists). Who is likely to support this policy? Suppose that the fall in price is attributable not to a technological advance but to a subsidy from the Brazilian government to Brazilian ethanol producers. How would this affect your analysis?
(a) Draw an offer curve for Guatemala that shows its offer of coffee for wheat. Include both an elastic and inelastic range in Guatemala’s offer curve. (b) Draw an offer curve for the United States that shows its offer of wheat for coffee. Show this US curve intersecting the Guatemalan offer curve in the inelastic range of the Guatemalan curve. Note the equilibrium terms of trade established. (c) Compare the equilibrium international price you found in question (b) to the autarky prices in Guatemala and in the United States. (You can find a country’s autarky price by drawing a line tangent to the offer curve at the origin.) Explain which country benefits the most from a more favorable movement in its terms of trade when it abandons its autarky position. (d) “The Guatemalan offer curve is likely to be less elastic than the US offer curve.” Justify this claim by explaining what factors determine the elasticity of an offer curve.
[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.] [Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences. How to draw the graph?
Suppose that Canada imports pearl necklaces from India. The free market price is $111.00 per necklace. If the tariff on imports in Canada is initially 26%, Canadians pay $ per necklace. One of the accomplishments of the Uruguay Round that took place between 1986 and 1993 was significant across-the-board tariff cuts for industrial countries, as well as many developing countries. Suppose that as a result of the Uruguay Round, Canada reduces its import tariffs to 13%. Assuming the price of pearl necklaces is still $111.00 per necklace, consumers now pay the price of $ Based on the calculations and the scenarios presented, the Uruguay Round most likely hurts consumers hurts consumers in India. per necklace. in Canada and
Problem 2.1: Suppose that Domestic's market demand is given by the equation P = 47 3*Qd and market supply is given by P = 14+ 7*Qs (where P is the price, Qd is the quantity demanded, and Qs is the quantity supplied). Domestic markets are perfectly competitive. Domestic faces export supply given by the equation P = 28 + 0*Qe (where Qe is the quantity exported) and is considering imposing a per-unit import tariff. Calculate consumer surplus in autarky. Please report your answer rounded to two decimal places (e.g., 4.256 becomes 4.26).
Suppose you have the following for white t-shirts market:Market demand is P=125-(3/8)QMarket supply is P=5+(1/8)Q. Suppose it is now possible to obtain white t-shirts from the rest of the world at $15 per item at anygiven quantity. In other words, there is now a global supply that is horizontal at $15.a. Obviously the world price and domestic price will now be $15. Calculate the quantityproduced and demanded domestically. Calculate the difference as imports from the rest of theworld.b. Calculate the CS (Consumer Surplus) and PS (Producer Surplus) under free trade. Who gainswith free trade? Who loses?Hint: Use graphs first.
5. Agricultural export subsidies in a small nation The following graph shows the market for wheat in Canada, where Do is the demand curve, Sc is the supply curve, and Pw is the free trade price of wheat. Assume that Canada is a relatively small producer of wheat, so changes in its output do not affect the world price of wheat. Also assume that Canada is currently open to free trade, and domestic consumers are able to purchase wheat at the world price with negligible transportation costs. Suppose a subsidy of $80 per ton is granted to exporters in Canada, allowing them to sell their products abroad at prices below their costs. Assume that trade restrictions are also put in place in order to prevent domestic consumers from buying wheat abroad at the world price. Use the grey line (star symbols) to indicate the world price of wheat plus the subsidy on the following graph. Then use the black point (plus symbol) to indicate the price of wheat in Canada and the quantity demanded at that…
The figure shows a country’s domestic supply and demand curves for a good, as well as the world price, Pw, for the good that it faces, as a small country, on the world market. Initially, the country is exporting X1 units of that good at that price. Suppose that producers in this industry lobby policy makers to provide them with some sort of assistance to help them export even more. Policy makers are considering an export subsidy. What area represents the cost of this subsidy to the government (taxpayers)? Group of answer choices b+c+d a+b+c+d c+d a+b+c
The figure below depicts the domestic market for a particular good. The curve labeled S represents domestic supply. The curve labeled D represents domestic demand. The line labeled Pw is the world price of the good. If the figure does not show, you may view it by clicking the following link: Market with Trade PDF.pdf. Price 50 45 40 35 30 25 20 15 10 5 0 0 10 20 30 40 50 60 The quantity of domestic consumption is Assume that international trade HAS been established. The quantity of domestic production is The quantity of imports is The new value of consumer surplus is $ 70 The new value of producer surplus is $ The government revenue from the tariff is $ 80 units. 90 100 Quantity units. 110 units. Assume now that the home country has imposed a $10 tariff on imports of the good. 120 U₂₁ S Pw O 130 140 150 160 170 180 190 200