Chapter 44, Problem 2FRQ

a)

To determine

The quantity of cheese that country F imports.

Explanation of Solution

The imported quantity in country F would be calculated by subtracting the total quantity from exported quantity in the country.

  $\begin{array}{l}\text{Import = Total quantity consumption}-\text{export}\hfill \\ \text{ = 8 million}-\text{3 million}\hfill \\ \text{ = 5 million}\hfill \end{array}$

As from the graph, a total 5 million of pounds of cheese would be imported by country F.

Economics Concept Introduction

Introduction: Selling products and services to another country from one's own country is known as exporting and purchasing goods from elsewhere and bringing them into your own country is referred to as importing.

b)

To determine

The price at the new trade equilibrium when country F adopts an import of 2 million pounds of cheese and the quantity of cheese that French suppliers provide domestically.

Explanation of Solution

The new trade equilibrium will occur at the price of 4 euros where the quantity and price are equal to each other.

At this point, the French suppliers would provide 4 million pounds of cheese domestically as the curve of French firms cuts at this point where the quantity is 4 million on the graph.

If the country imposed a tariff rather than a quota to restrict the import of cheese, then to get the result of 2 million pounds of cheese to import would need the amount of tariff of €5 because at this level 2 million pounds of cheese can be imported with the same level of demand.

Economics Concept Introduction

Introduction: The set of economic factors such as price and quantity that operates the economy regularly is called equilibrium in the economy.

c)

To determine

The quantity of cheese that France would import when a tariff of €4 per pound of cheese is imposed.

Explanation of Solution

If the tariff of €4 is imposed in country F as per pound of cheese, as there is no other trade restriction it would result in a 4 million pound quantity would be imported by the country. This will happen because at the level of the tariff of €4 the price shows the quantity of 4 million pounds of cheese on the graph.

Economics Concept Introduction

Introduction: A global decentralized market for trading currencies is known as the foreign exchange market and for every currency, the foreign exchange rates are set by this market.