EBK ECONOMICS
20th Edition
ISBN: 9780077660710
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 38, Problem 10DQ
To determine
How tariffs reduce the imports as well as the exports of the country.
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Students have asked these similar questions
Suppose that one country (Country A) subsidizes its exports and the other country (Country B) imposes a "countervailing" tariff that offsets its effect, so that in the end relative prices in the second
country are unchanged. What happens to the terms of trade? What about welfare in the two countries?
O A. From Country A's perspective, world relative supply will increase and world relative demand will increase. This will improve its terms of trade. The countervailing tariff exacerbates this effect
so Country A will definitely gain and Country B definitely loses.
O B. From Country A's perspective, world relative supply will decrease and world relative demand will increase. This will improve its terms of trade. The countervailing tariff exacerbates this
effect so Country A will definitely gain and Country B definitely loses.
C. From Country A's perspective, world relative supply will decrease and world relative demand will increase. This will worsen its terms of trade. The countervailing…
1.
Price (dollars per shirt)
44
40
36
32
28
24
20
16
12
O
8
O 32 million
The figure shows the market for shirts in the United States, where D is the domestic demand curve
and S is the domestic supply curve. The world price is $20 per shirt. The United States imposes a
tariff on imported shirts, $4 per shirt.
24 million
S
In the figure above, with the tariff the United States imports
8 million
D
O 16 million
16 24 32 40 48 56 64
Quantity (millions of shirts per year)
million shirts per year.
Chapter 38 Solutions
EBK ECONOMICS
Ch. 38.2 - Prob. 1QQCh. 38.2 - Prob. 2QQCh. 38.2 - Prob. 3QQCh. 38.2 - Prob. 4QQCh. 38 - Prob. 1DQCh. 38 - Prob. 2DQCh. 38 - Prob. 3DQCh. 38 - Prob. 4DQCh. 38 - Prob. 5DQCh. 38 - Prob. 6DQ
Ch. 38 - Prob. 7DQCh. 38 - Prob. 8DQCh. 38 - Prob. 9DQCh. 38 - Prob. 10DQCh. 38 - Prob. 11DQCh. 38 - Prob. 12DQCh. 38 - Prob. 13DQCh. 38 - Prob. 14DQCh. 38 - Prob. 1RQCh. 38 - Prob. 2RQCh. 38 - Prob. 3RQCh. 38 - Prob. 4RQCh. 38 - Prob. 5RQCh. 38 - Prob. 6RQCh. 38 - Prob. 7RQCh. 38 - Prob. 8RQCh. 38 - Prob. 9RQCh. 38 - Prob. 10RQCh. 38 - Prob. 11RQCh. 38 - Prob. 12RQCh. 38 - Prob. 13RQCh. 38 - Prob. 1PCh. 38 - Prob. 2PCh. 38 - Prob. 3PCh. 38 - Prob. 4P
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Similar questions
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- Assume the United States is a large consumer of steel, able to influence the world price. Its demand and supply schedules are respectively denoted by Dus and Sus in Figure 42. The overall (United States plus world) supply schedule of steel is denoted by Sus.. Figure 4.2. Import Tariff Levied by a Large Country 8 550 475 450 325 0 5 10 O $450, 5 tons, 60 tons, 55 tons O $475, 10 tons, 50 tons, 40 tons O $525, 5 tons, 60 tons, 55 tons 20 O $630, 30 tons, 30 tons, 0 tons 30 40 Consider Figure 4.2. With free trade, the United States achieves market equilibrium at a price of Sus 50 55 Sus W.1 Sus+ w Dus Tons of Steel At this price, of steel are produced by U.S. firms, are bought by U.S. buyers, and are imported.arrow_forwardFigure: Trade 1 Price $200 175 150 Domestic Supply 500 7501,000:1,300 1,150 World Supply + Tariff World Supply Domestic Demand Quantity If the world price for the good in this figure is higher than the domestic price, a move to free international trade means that the domestic economy will become: O either a net importer or a net exporter of the good, but it is impossible to say which. O a net importer of the good. neither a net importer nor a net exporter of the good. a net exporter of the good.arrow_forward5. You have been asked to quantify the effects of removing a country's tariff on sugar. The hard part of the work is already done: Somebody has estimated how many pounds of sugar would be produced, consumed, and imported by the country if there were no sugar duty. You are given the information shown in the table. Situation with Import Tariff Estimated Situation without Tariff World price Tariff $0.10 per pound $0.02 per pound $0.12 per pound $0.10 per pound Domestic price Domestic consumption (billions of pounds per year) Domestic production (billions of pounds per year) Imports (billions of pounds per year) $0.10 per pound 20 22 8 6 12 16 Calculate the following measures: a. The domestic consumers' gain from removing the tariff. b. The domestic producers' loss from removing the tariff. c. The government tariff revenue loss. d. The net effect on national well-being.arrow_forward
- 3. The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade, the optimal product mix for China is alternative B and for the United States is alternative U. LO20.2 a. Are comparative-cost conditions such that the two countries should specialize? If so, what product should each produce? b. What is the total gain in apparel and chemical output that would result from such specialization? c. What are the limits of the terms of trade? Suppose that the actual terms of trade are 1 unit of apparel for 1 unit of chemicals and 4 units of apparel for 6 units of chemicals. What are the gains from specialization and trade for each nation? China Production Possibilities Product A D F Apparel (in thousands) 30 24 18 12 Chemicals (in tons) 12 18 24 30 U.S. Production Possibilities Product R T. V Apparel (in thousands) hemicals (in tons) 10 8. 4 4 8. 12 16 20 p. 579arrow_forwardAssume that the comparative-cost ratios of two products—baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula ≡ 5 cans tuna fish Tunata: 1 can baby formula ≡ 7 cans tuna fish a. In what product should each nation specialize? Canswicki should produce _____- , and Tunata should produce _____ b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula ≡ 4 cans tuna fish: yes or no ii. 1 can baby formula ≡ 8 cans tuna fish: yes or no iii. 1 can baby formula ≡ 5.5 cans tuna fish: yes or noarrow_forwardA "static" gain resulting from the formation of the European Union or the U.S.-Mexico-Canada Trade Agreement would be O expanded size of the market due to trade, resulting in economies of large-scale production and decreasing unit cost. outward shifts in a country's production possibilities frontier made possible by the discovery of new technologies. O facing lower priced, zero-tariff imports from members, consumers increase their demand for these goods, and new trade will be created O increased saving and investment resulting in capital accumulation and economic growth.arrow_forward
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