Microeconomics
Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
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Chapter 10, Problem 5IP
To determine

The trade between US and Mex with chemical used vegetables.

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Exporting countries Which of the following will be true, everything else remaining constant, for a country that exports some good?    a)The greater the price elasticity of supply for the good in the exporting country, the greater the volume of exports.   b) The more that consumers in the exporting country respond to a change in price, the greater will be the gains from trade.   b) The smaller the price elasticity of demand and supply in the exporting country, the greater the gains from trade.   c) Some domestic suppliers will lose surplus while others will gain surplus.     Choose the statements that match the question and briefly explain your reasoning to understand the question better. Thankyou.
The graph above is the U.S. market for some imported good. Supply is a flat curve. The U.S. can import the Chinese good for $40 and the Mexican good for $48. Assume the U.S. imposes $10 tariffs on each unit of the imported good. What will be the quantity imported? From which country? How your answer will change if the U.S. keep the $10 tariffs but join a trade bloc with Mexico? Will the country’s wellbeing increase or decrease? By how much (hint find the change in consumer surplus and the change in government revenue)? Explain your answers.
Georgia and Moldova are famous for their quality of wine and the United Kingdom decides to start importing from them. There is an 5£ tariff on imported wine. Considering the graph below, where does the UK buy its wine from and how much does it cost on the domestic market? Price per bottle £10 £7 Moldovan price £5 Georgian price UK demand for imported wine Quantity (millions of bottles per year) 10 15 22 Suppose the UK joins a trade bloc with Moldova and maintains its 5£ tariff on wine from outside the bloc. a) What will the new domestic price be? b) How much do consumers gain/lose? c) How about the government? d) Is there trade creation or trade dıversion or both? e) How much does the UK gain/lose?
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