Using the graph, assume that the government imposes a $1 tariff on textiles. Answer the following questions. (please write the calculation details) (1) What is the domestic price and quantity demanded of textiles after the tariff is imposed? (2) What would be the amount of the change in consumer surplus after and before the tariff? (3) What would be the amount of the change in producer surplus after and before the tariff? (4) What would be the total amount of deadweight loss due to the tariff? Doestc Price $13 ing Macro Final_Macro... Juliet 1.00 Word Price Doest Demand 3040 60 84 96 Quantity

Using the graph, assume that the government imposes a $1 tariff on textiles. Answer the following questions. (please write the calculation details) (1) What is the domestic price and quantity demanded of textiles after the tariff is imposed? (2) What would be the amount of the change in consumer surplus after and before the tariff? (3) What would be the amount of the change in producer surplus after and before the tariff? (4) What would be the total amount of deadweight loss due to the tariff? Doestc Price $13 ing Macro Final_Macro... Juliet 1.00 Word Price Doest Demand 3040 60 84 96 Quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Welfare effects of a tariff in a small country Suppose Bolivia is open to free trade in the world market for wheat. Because of Bolivia's small size, the demand for and supply of wheat in Bolivia do not affect the world price. The following graph shows the domestic wheat market in Bolivia. 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 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). Domestic Supply 460 Domestic Demand 430 cs 400 370 340 PS 310 280 250 220 190 160 0 25 50 75 100 125 150 175 200 225 250 QUANTITY (Tons of wheat) If Bolivia allows international trade in the market for wheat, it will import tons of wheat. Now suppose the Bolivian government decides to impose a tariff of $30 on each imported ton of wheat. After the tariff, the price Bollvian consumers…
South Korea to Resume US Beef Imports South Korea will open its market to most U.S. beef. South Korea banned imports of U.S. beef in 2003 amid concerns over a case of mad cow disease in the United States. The ban closed what was then the third-largest market for U.S. beef exporters. Source: CNN, May 29, 2008 The graph shows the market for beef in the United States. Assume that South Korea is the only importer of U.S. beef. Draw a point of the quantity demanded and the price when South Korea allows imports of beef from the United States. Label this point 1. Draw a point at the quantity supplied by U.S. beef farmers and the price when South Korea allows imports of beef from the United States. Label this point 2. Draw a point to show the price and quantity of beef when South Korea bans imports of U.S. beef. In the United States, the winners from the ban on U.S. beef are losers are A. producers; consumers OB. consumers; producers and the 12- 10- 4- 2- Price (dollars per pound) 80 S World…
Lesson 12 Question 4
Economics Question
Below is a domestic supply and demand graph for cotton. Label the free trade equilibrium point (FTE). Assume a tariff is placed on imported cotton that eliminates all imports. 1. Label the tariff equilibrium point (TE). 2. Shade in the lost gains from trade (LGT) because of this tariff. Lost gains from trade are also called deadweight loss. 3. Shade in the area representing the wasted resources (WR) created as a result of the restriction on imported cotton. Price per pound (cents) 120 115 110 105 100 95 90 85 80 75 domestic demand amount of cotton: VE 22 domestic supply 70 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 Quantity (billion lbs) Incorrect TE world supply At the free trade equilibrium point, how much cotton does the United States grow and produce? LGT WR billion lbs
Before the North American Free Trade Agreement (NAFTA) gradually eliminated import tariffs on goods, the autarky price of tomatoes in Mexico was below the world price and in the United States was above the world price. Similarly, the autarky price of poultry in Mexico was above the world price and in the United States was below the world price. Draw diagrams with domestic supply and demand curves for each country and each of the two goods. As a result of NAFTA, the United States now imports tomatoes from Mexico and the United States now exports poultry to Mexico. How would you expect the following groups to be affected? a. Mexican and U.S. consumers of tomatoes. Illustrate the effect on consumer surplus in your diagram. b. Mexican and U.S. producers of tomatoes. Illustrate the effect on producer surplus in your diagram. c. Mexican and U.S. tomato workers. d. Mexican and U.S. consumers of poultry. Illustrate the effect on consumer surplus in your diagram. e. Mexican and U.S.…
Economic Use the graph below and the following information to answer the next question. The world price of soybeans is five dollars per bushel and the importing country is small enough to not affect the real price. Suppose the government puts a tariff of one dollars per bushel on soybean imports how much revenue will the government raise from a one dollar per bushel tariff on soybean imports.
4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Guatemala. The world price (PW) of maize is $250 per tonne and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place
Suppose Home is a small country and instead of a tariff, Home applies an import quota limiting the amount foreign can sell to 2 units. The free trade price was at $6. Graphs for Home market and International market are as below: Price Home market Price International market 18 8. 4 M 2 4 5 6 8 Quantity Import 1. With import quota, the new price that consumers need to pay become $ 2. If the quota licenses are allocated to domestic producers, comparing with free trade, change in consumer surplus will be S change in producer surplus will be $ quota rents earned at Home will be $ and net effect on Home total welfare will be $ (Please use the negative sign if there is a decrease in welfare) 3. If the quota license are given to the foreign exporters, comparing with free trade, change in consumer surplus will be $ change in producer surplus will be S quota rents earned at Home will be $ and net effect on Home total welfare will be $ (Please use the negative sign if there is a decrease in…
Suppose Guatemala is open to free trade in the world market for wheat. Since Guatemala is small relative to the international market, the demand for and supply of wheat in Guatemala have no impact on the world price. The following graph shows the domestic market for wheat in Guatemala. The world price of a ton of wheat is Pw = $400. 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) 1200 1100 1000+ 900 800 700 600 500 400 300- 200 0 Domestic Demand 20 40 Domestic Supply 60 80 100 120 140 QUANTITY (Tons of wheat) PW 160 180 200 A CS T PS Because Guatemala participates in international trade in the market for wheat, it will import tons of wheat. Now suppose the Guatemalan government decides to impose a tariff of $200 on each imported ton of…
The following graph shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good. In such a case, the gain in producer surplus as a result of a tariff of $0.50 per unit is represented by the area Figure 19.2 Price per unit a $2.00 1.50 1.00 Quantity (units) 35 50 65 75 85 O h O c+g O c O c+h O g
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