Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 33, Problem 3.3P
To determine
Reason why countries are both importers and exporters of many products.
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Do you think a country should have more imports or exports, and explain your reasoning
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.
“Imports destroy jobs; exports create them. The average American is hurt by imports and helped by exports.” Do you agree or disagree with this statement? Explain.
Chapter 33 Solutions
Principles of Economics (12th Edition)
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- Steel Industry Consider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply for steel in this country. One of the two price lines represents the world price of steel. Use the following graph to help you answer the questions below. You will not be graded on any changes made to this graph. 1. Because this country exports steel, the world price is represented by P1 or P2. Suppose that a “pro-trade” government decides to subsidize the export of steel by paying $10 for each ton sold abroad. 2. With this export subsidy, the price paid by domestic consumers is $???? per ton, and the price received by domestic producers is $???? per ton. 3. The quantity of steel consumed by domestic consumers INCREASES or REMAINS UNCHANGED or DECREASES, the quantity of steel produced by domestic producers INCREASES or REMAINS UNCHANGED or DECREASES, and the quantity of steel exported INCREASES or REMAINS UNCHANGED or DECREASES. 4. TRUE or FALSE:…arrow_forward23. What happens to the relative price of a good as a result of trade if there is an increasing return to scale in the industry producing the good. Is it still converging to a price between domestic and foreign price of the good? Draw a graph to answer.arrow_forwardExport Subsidy. Suppose the home country exports cloth and imports food. Show the impact of an export subsidy by the home country using the relative demand and relative supply curves for cloth. What is the impact on the home country's terms of trade? Make sure you label your graph and explain your reasoning.arrow_forward
- Use the graph below to answer the following question: What is the total amount of shoes the US will export with free trade? Provide your answer below: Price (dollars) 50 25 15 United States Exports Supply Price with free trade Price with partial protection Price without trade 200 350 500 600 750 Quantity (shoes) Demandarrow_forwardAccording to the foreign trade effect, when the price of American-made cars falls, U.S. consumers are likely to buy: More American-made cars. More foreign-made cars. Fewer total cars. More foreign-made carsarrow_forwardConsider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply for steel in this country. One of the two price lines represents the world price of steel. Use the following graph to help you answer the questions below. You will not be graded on any changes made to this graph. Demand Supply 100 90 Triangle 80 P2 70 Polygon 50 40 P1 20 10 400 500 600 700 800 900 1000 100 200 300 Quantity of Steel (Tons) Price of Steel (Dollars per ton)arrow_forward
- Consider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply for steel in this country. One of the two price lines represents the world price of steel. Use the following graph to help you answer the questions below. You will not be graded on any changes made to this graph. Price of Steel (Dollars per ton) 100 88 2882 8 20 10 Demand Supply 100 200 300 400 500 600 700 800 900 1000 Quantity of Steel (Tons) Because this country exports steel, the world price is represented by With this export subsidy, the price paid by domestic consumers is $ The quantity of steel consumed by domestic consumers , and the quantity of steel exported O True O False Triangle 8 Suppose that a "pro-trade" government decides to subsidize the export of steel by paying $10 for each ton sold abroad. Under the export subsidy, consumer surplus is $ S As a result, total surplus Polygon ? True or False: With the export subsidy, domestic producers will sell steel to…arrow_forwardGhana imports and exports food from and to neighbouring Côte d'Ivoire. The latter nation is very similar to Ghana in most ways. Can you explain what may drive two very similar nations to trade?arrow_forwardWhy Japan is dependent on food import?arrow_forward
- The graph to the right shows the supply and demand for beef in the United States, under the assumption that the United States can import as much as it wants at the world price of beef without causing the world price of beef to increase. a. How much beef does the United States import at the world price(WP)? 500 million pounds of beef (enter a whole number). b. Now suppose that the United States imposes a tariff on beef of $0.50 a pound. How much beef is now imported? million pounds of beef (enter a whole number). Price ($ per lb.) $2.50 $2.00 700 900 11001200 Q (millions of lbs.) Sus WP + tariff WP Dusarrow_forwardAs a country develops economically, what changes usually take place in the goods it exports? Select your answer and explain WHY There is little change because comparative advantage does not change. Raw materials and agricultural products decline in importance, replaced by services and manufactured goods. Services and manufactured goods decline in importance, replaced by raw materials and agricultural products. Exports go from being diversified to being specialized in whatever the country finds its comparative advantage.arrow_forwardIf a smaller country imports a good (electronics) from a larger country, is it beneficial for the smaller countryto impose quotas on the good coming from the larger country. Will this affect the consumers of electronics, the domestic producers of electronics and the government?arrow_forward
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