Trade Restrictions - TariffsDirections: Answer the questions below based on the graph.Price$11.00$7.50$6.00$4.004 6 91215Quantity1. How many units will the domestic firms produce without trade?2. How many units will the domestic firms produce without a tariff if the foreign producer can sell the product at a $4 price?3. How many units will the foreign firms produce / sell if a government tariff of $2.00 is imposed on foreign goods?4. What will be the total government revenues if a tariff of $2.00 is imposed on foreign goods?5. What will be the total deadweight losses if a tariff of s2.00 is imposed on foreign goods?

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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 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. 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 8 ↑ Price 20 10 200 400 600 300 units of the good. Refer to Figure 9-22. With free trade, the country imports 600 units of the good. 900 units of the good. – 1,200 units of the good. 800 1000 1200 1400 1600 1800 2000 2200 Domestic Supply Domestic Demand 2400 Quantity
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Sometimes governments use the 'national security' argument to justify protecting an industry with tariffs. (Choose the best answer) O Stockpiling the product is a plausible alternative to ensure national security interests without risking a trade war. O An export subsidy would always be the first best option Most countries are much weaker than the USA and therfore would never retaliate. O This argument is always plausible since tarrifs are the best way to ensure the industry is able to survive.
Price P1 D 01 Quantity The graph above shows domestic supply and demand with trade in a SMALL country. With trade, this country can purchase at the world price, Pw. Suppose that this country imposes a $5 per unit tariff on this good. Which of the following is true? O There will not be deadweight losses due to this tariff, since it is a small country. The domestic price will rise by $5. O Consumers will be better off. Producers will not increase domestic production.
Price $36 $30 $26 I I Home market S D 20 40 80 100 Quantity Price 40 World market I 80 X* + t ·X* Imports The graphs show the case for a tariff imposed by a large country. According to these graphs, if the world price of the product is given as $30 and a $10 tariff is imposed, then the new price after the tariff is $36. So the terms-of-trade gain is 40 80 10 160
US imports of sugar are subject to a quota. Although rounded up, the figures used in this exercise are close to reality. Thanks to the quota, US production of sugar is 6 million ton/year, instead of 5 million without the quota, and US consumption of sugar is 8 million ton/year, instead of 9 million without the quota. The US consumer pays $480/ton, whereas the world price is $280/ton. a) Easy: What is the volume of the quota? b) Easy: Why is the US price higher with the quota? c) Medium: Can you plot US supply and demand curves? Show graphically the impact of the quota for consumers and producers.
The US decides to impose a tariff on Avocados of $0.75 each Under Free Trade you have the following information: $1 per Unit World and US Price: Domestic Consumption 25 Billion Units 1 Billion Units Domestic Production: Under a Tariff you have the following information: New US Price: $1.75 per Unit Domestic Consumption: Domestic Production: 21 Billion Units 5 Billion Units (a) How much does the government gain in tariff revenue? (b) How much do domestic producers gain? (c) How much do consumers lose? (d) What is net national or "dead weight" loss?
Question 7 Consider again this same graph: Price 40 8 7 6 5 4 3 2 0 Tariff Domestic supply Domestic demand 10 20 30 40 50 60 70 80 World price Quantity Tell me the amount of gains from trade, carefully following all numeric instructions.
True or False: If a country is open to international trade, the domestic price can differ from the international price.
This graph demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. 215 175 130 100 M A B D H 250 $19,500. O $27,000. $37,500. C O $34,500. 500 F G J 815 K S World Price + tariff World Price 1150 1500 According to the graph shown, if the economy decides to impose a tariff, the government can expect to raise how much in government revenues? D Q
Price $16 129 14 12 10 8 co 6 4 2 Sd 0 10 20 30 40 50 60 70 80 90 Quantity Dd Please refer to the graph provided, which displays the domestic supply (S) and demand (D) curves for a certain product. The world price of this product is $6. If this particular market is open to international trade, but there is a tariff of $6 per unit imposed, then the domestic producers will earn $240, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $40 $600, and there will be no imports and no tariff revenue. $120, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $80 O $400, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $40

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