Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 3, Problem 6SCQ
A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on imported flat screen televisions. Using the four-step analysis, how do you think the tariff reduction will affect the
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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?
Analyze the impact of a decrease in tariffs (taxes) on imported flat screen televisions in the market for flat screen televisions.
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Chapter 3 Solutions
Principles of Economics 2e
Ch. 3 - Review Figure 3.4. Suppose the price of gasoline...Ch. 3 - Why do economists use the ceteris paribus...Ch. 3 - In an analysis of the market for paint, an...Ch. 3 - Many changes are affecting the market for oil....Ch. 3 - Lets think about the market for air travel. From...Ch. 3 - A tariff is a tax on imported goods. Suppose the...Ch. 3 - What is the effect of a price ceiling on the...Ch. 3 - Does a price ceiling change the equilibrium price?Ch. 3 - What would be the impact of imposing a price flour...Ch. 3 - Does a price ceiling increase the decrease the...
Ch. 3 - If a price floor benefits producers, why does a...Ch. 3 - What determines the level of prices in a market?Ch. 3 - What does a downward-sloping demand curve mean...Ch. 3 - Will demand curves have the same exact shape in...Ch. 3 - Will supply curves have the same shape in all...Ch. 3 - What is the relationship between quantity Demanded...Ch. 3 - How can you locate the equilibrium point on a...Ch. 3 - If the price is above line equilibrium level,...Ch. 3 - When the price is above the equilibrium, explain...Ch. 3 - What is the difference between the demand and the...Ch. 3 - What is the difference between the supply and the...Ch. 3 - When analyzing a market, how do economists deal...Ch. 3 - Name some factors that can cause a shift in line...Ch. 3 - Name some farm that can cause a shift in the...Ch. 3 - How does one analyze a market where both demand...Ch. 3 - What causes a movement along the demand curve?...Ch. 3 - Does a price ceiling attempt to make a price...Ch. 3 - How does a price ceiling set below the equilibrium...Ch. 3 - Does a price floor attempt to make a price higher...Ch. 3 - How does a price floor 521 above the equilibrium...Ch. 3 - What is consumer surplus? How is it illustrated on...Ch. 3 - What is producer surplus? How is it illustrated on...Ch. 3 - What is total surplus? How is it illustrated on a...Ch. 3 - What is the relationship between total surplus and...Ch. 3 - What is deadweight loss?Ch. 3 - Review Figure 3.4. Suppose the government decided...Ch. 3 - Explain why the following statement is false: In...Ch. 3 - Explain why the following statement is false: In...Ch. 3 - Consider the demand for hamburgers. If the price...Ch. 3 - How do you suppose the demographics of an aging...Ch. 3 - We know that a change in the price of a product...Ch. 3 - Suppose there is a soda tax to curb obesity. What...Ch. 3 - Use the four-step process to analyze the impact of...Ch. 3 - Use the four-step process to analyze the impact of...Ch. 3 - Suppose both of these events took place at the...Ch. 3 - Must government policy decisions have winners and...Ch. 3 - Agricultural price supports result in governments...Ch. 3 - Can you propose a policy that meld induce the...Ch. 3 - What term would an economist use to describe what...Ch. 3 - Explain why voluntary Martians improve social...Ch. 3 - Why would a free market mar operate at a quantity...Ch. 3 - Review Figure 3.4 again. Suppose the price of...Ch. 3 - Table 3.8 shows information on the demand and...Ch. 3 - The computer market in recent years has seen many...Ch. 3 - Table 3.9 illustrates the markets demand and...Ch. 3 - Table 3.10 shows the supply and demand for movie...Ch. 3 - A low-income county decides to set a price ceiling...
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- In an effort to protect its domestic pear production, the Kingdom of Genovia decides to place an import tariff on pears. Which of the following correctly explains the tariff’s effect on domestic demand? Choice 1 of 4:The tariff will raise domestic prices and decrease the quantity demanded.Choice 2 of 4:The tariff will raise domestic prices and cause the demand curve to shift left.Choice 3 of 4:Tariffs do not impact the domestic quantity demanded.Choice 4 of 4:The tariff will lower domestic prices and increase the quantity demanded.arrow_forwardChina placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 11.5 – Q Supply: P = 5.5 + Q Price is in 10 Yuan (¥) per bushel of soybeans and the units for Quantity are 100 million bushels per year. This is to make graphing simpler. This does NOT mean that the price is 10 and quantity is 100. Rather it means that if the price was 40¥ and the quantity was 7,500,000,000 bushels, this would plot as 4 and 7.5 respectively. The world price for soybeans is ¥65/bushel (this would graph as a horizontal line at 6.5). Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including: Domestic Demand curve (D), Domestic Supply curve (S), the World Price (WP), and the Price with tariffs (PT), along with the quantities imported both with and without the tariff. Based on your graph, what…arrow_forwardSuppose Zambia is open to free trade in the world market for soybeans. Since Zambia is small relative to the international market, the demand for and supply of soybeans in Zambia have no impact on the world price. The following graph shows the domestic market for soybeans in Zambia. The world price of a ton of soybeans is PW = $250. Use the following graph to show the effects of the $ 10 tariff. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff.arrow_forward
- A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade): $20 per bottle Domestic production (free trade): 500,000 bottles Domestic production (after tariff): 600,000 bottles Domestic consumption (free trade): 750,000 bottles Domestic consumption (after tariff): 650,000 bottles Draw a demand and supply curve for the country’s wine market to show the effects of the tariff. Find the change in consumer surplus, producer surplus, and government revenue resulting from the tariff.arrow_forwardThe following graph shows the market for wheat in the European Union (EU). The world price of wheat is $4.00 per bushel, so Sworld represents the world supply assuming that the EU cannot affect the world price of wheat. To support the agricultural sector, the EU guarantees a certain price for the farmers by imposing a variable levy of $4.00 per bushel to limit the import of wheat. On the graph, use the purple line (diamond symbol) to show the support price the farmers receive due to the variable $4.00 levy. Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position. PRICE (Dollars per bushel) 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0 DEU SEU SWorld 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 WHEAT (Bushels) Before the levy After the levy Support Price SWorld New Fill in the following table by entering the quantities for production, consumption, and imports of wheat in the EU…arrow_forwardThe graph to the right shows the supply and demand for Japanese-made automobiles in the United States. Assume that Japanese-made and U.S.-made automobiles are of the same quality and are considered to be perfect substitutes. Suppose that the U.S. government imposes a tariff on Japanese-made automobiles. 1.) Using the line drawing tool, show the effect on the market for Japanese-made automobiles. Properly label your line. 2.) Using the point drawing tool, identify the new equilibrium price and quantity. Label it 'E₂'. Carefully follow the instructions above, and only draw the required objects. As a result of the tariff, the price of Japanese-made cars rises and the quantity falls. In the market for American-made cars, there will be and thus the price of American-made cars will equilibrium quantity will and the Price per Automobile ($) S Japanese-made Automobiles (thousands)arrow_forward
- Suppose a per-unit tariff of $10 is imposed on imported cell phones. After the tariff: - The quantity demanded is 10 million - The quantity supplied domestically is 2 million Calculate the amount of tax revenue collected due to the tariff.arrow_forwardPrice 10 Price at which good sells = 7.25 Price at which good sells = 6 Marginal cost of producing amount traded = 4 Marginal cost of producing amount traded = 2.75 Price Price gap=t gap=t 4,000 6,000 Quantity Figure 18.3 The market for cars: Price gaps reflect trade costs. The exporter's supply curve The consumer's demand curve 15,000arrow_forwardConsider the Colombian market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Colombia. Suppose Colombia's government currently does not allow international trade in soybeans. Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity of soybeans in Colombia in the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium. Based on the previous graph, total surplus in the absence of international trade is . The following graph shows the same domestic demand and supply curves for soybeans in Colombia. Suppose that the Colombian government changes its international trade policy to allow free trade in soybeans. The horizontal black line (PWPW) represents the world…arrow_forward
- Because Zambia participates in international trade in the market for soybeans, it will import tons of soybeans. Now suppose the Zambian government decides to impose a tariff of $10 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes , and Zambia will import tons of soybeans. Use the following graph to show the effects of the $10 tariffarrow_forwardUnder what conditions could an import quota and a tariff have have exactly the same effect on price and bring the same gain and losses ( given a tariff level that restricts imports just as much as the quota would)?arrow_forwardThe 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.arrow_forward
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