The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. ↑ Price 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 Domestic Supply Domestic Demand 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 Quantity Suppose the government imposes a tariff of $20 per unit. The amount of revenue collected by the government from the tariff is O $15,000. O $6,000. O $9,000. O $12,000.

Assume a perfectly competitive market and the exporting country is small. Using a demand and supply diagram, show the impact of increasing standards on a low-income exporter of toys. Show the tariffs impact. Is the effect on toy prices the same or different? Why is a standards policy preferred to tariffs?

The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 34.6 and Table 34.7. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell? What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell? Sketch two supply and demand diagrams, one for each country, in the situation before trade. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade. If the Land of Submarines imposes an anti- dumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country. Does your general answer change if the Land of Submarines imposes an import quota of 70?

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.