Macroeconomics
Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 21.2, Problem 2ST
To determine

The directional changes in consumers’ and producers’ surplus.

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The demand for cameras in a certain country is given by D = 8000 – 30P, where P is the price of acamera. Supply by domestic camera producers is S = 4000 + 10P. If this economy opens to tradewhile the world price of a camera is $50, and the government imposes a tariff of $30 per camera,what will be the quantity of cameras that this country imports or exports?
Although both tariffs and quotas are tools used to restrict or reduce trade, which of the statements best describes their differences? which sentence is true? Tariffs are a subsidy for exported goods, and quotas act as a minimum limit of exports. Tariffs are a tax on imported goods, and quotas are limits on the number of imported goods. Tariffs are a tax on exported goods, and quotas are limits on the number of exported goods. Tariffs are a tax on imported goods, and quotas are limits on the number of exported goods. Quotas are a tax on imported goods, and tariffs are a tax on imported goods.
Vietnam has a policy of free trade in motorcycles which are sold in world markets at a price of 10,000 per motorcycle. Under free trade, Vietnam produces 100,000 motorcycles and imports 100,000 motorcycles. To provide some protection to the domestic industry, Vietnam imposes an import tariff of $1500 per motorcycle. With this tariff in place, production in Vietnam rises by 5,000 motorcycles and consumption drops by the same amount. Calculate the effects of the tariff on: a. Consumer Surplus b. Producer Surplus c. Government Revenues d. Overall Welfare e. If the tariff imposed by the Vietnamese had led to small reduction in world prices of, say, 250 dollars, how, qualitatively, would the welfare calculations (a), (b), (c) and (d) above change?
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