World Price : It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade. Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve. Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade. It is positively sloped curve. Tariff: It imposes restriction on the goods that are imported. It is an indirect tax levied on the goods in case of import and export. Consumer Surplus : It is difference between the amount that a consumer wants to pay and the real amount which he pays for goods and services. Producer Surplus : It is difference between the amount which the producer wants to receive and the real amount which he receives for goods and services.

Question

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Answer 1

Question

Chapter 5, Problem 5P

To determine

Concept Introduction:

World Price: It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade.

Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve.

Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade. It is positively sloped curve.

Tariff: It imposes restriction on the goods that are imported. It is an indirect tax levied on the goods in case of import and export.

Consumer Surplus: It is difference between the amount that a consumer wants to pay and the real amount which he pays for goods and services.

Producer Surplus: It is difference between the amount which the producer wants to receive and the real amount which he receives for goods and services.

Expert Solution & Answer

Answer to Problem 5P

a. Effect of trade of tomatoes on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 1

Fig 1

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 2

Fig 2

Explanation of Solution

U.S. Consumer

In the figure 1 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import, the price has decreased in U.S and the consumer surplus has increased by the shaded area equal to

Mexican Consumer

In the figure 2 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the consumer surplus has decreased by the shaded area equal to

b. Effect of trade of tomatoes on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 5

Fig 3

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 6

Fig 4

U.S. Producer

In the figure 3 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import the price has decreased in U.S and the producer surplus has decreased by the shaded area equal to (X).

Mexican Producer

In the figure 4, the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.So, Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the producer surplus has decreased by the shaded area equal to

c. Effect of trade on Mexican and U.S tomato workers.

Tomato workers in U.S are negatively affected but the workers in Mexico will benefit.

Due to international trade, U.S. imports tomatoes. As a result, the demand for domestic potatoes decreases and the wage of U.S. workers who are involved in the production of tomatoes decreases.

Due to international trade Mexico exports tomatoes. As a result, the demand for domestic potatoes increases and the wage of Mexican workers who are involved in the production of tomatoes increases.

d. Effect of trade of poultry on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 8

Fig 5

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 9

Fig 6

Mexican Consumer:

In the figure 5, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the consumer surplus has increased by the shaded area equal to

U.S. Consumer

In the figure 6, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_,and. U.S exports the surplus to Mexico.

Due to export the price has increased in U.S. As a result, the consumer surplus has decreased by the shaded area equal to

e. Effect of trade of poultry on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 12

Fig 7

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 13

Fig 8

Mexican Producer

In the figure 7 the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the producer surplus has decreased by the shaded area equal to

U.S. Producer

In the figure 8, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S exports the surplus to Mexico.

Due to export the price has increased in U.S and the producer surplus has increased by the shaded area equal to

f. Effect of trade on Mexican and U.S poultry workers.

Poultry workers in Mexico are negatively affected but workers in USA are will benefit.

Due to international trade U.S. exports poultry to Mexico. As a result the demand for domestic poultry increases in the world market so, the wage of U.S. workers who are involved in the poultry farming increases.

Due to international trade Mexico imports poultry from U.S. As a result the demand for domestic poultry decreases so, the wage of Mexican workers who are involved in the poultry farming decreases.

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

Answer 2

Question

Chapter 5, Problem 5P

To determine

Concept Introduction:

World Price: It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade.

Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve.

Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade. It is positively sloped curve.

Tariff: It imposes restriction on the goods that are imported. It is an indirect tax levied on the goods in case of import and export.

Consumer Surplus: It is difference between the amount that a consumer wants to pay and the real amount which he pays for goods and services.

Producer Surplus: It is difference between the amount which the producer wants to receive and the real amount which he receives for goods and services.

Expert Solution & Answer

Answer to Problem 5P

a. Effect of trade of tomatoes on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 1

Fig 1

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 2

Fig 2

Explanation of Solution

U.S. Consumer

In the figure 1 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import, the price has decreased in U.S and the consumer surplus has increased by the shaded area equal to

Mexican Consumer

In the figure 2 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the consumer surplus has decreased by the shaded area equal to

b. Effect of trade of tomatoes on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 5

Fig 3

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 6

Fig 4

U.S. Producer

In the figure 3 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import the price has decreased in U.S and the producer surplus has decreased by the shaded area equal to (X).

Mexican Producer

In the figure 4, the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.So, Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the producer surplus has decreased by the shaded area equal to

c. Effect of trade on Mexican and U.S tomato workers.

Tomato workers in U.S are negatively affected but the workers in Mexico will benefit.

Due to international trade, U.S. imports tomatoes. As a result, the demand for domestic potatoes decreases and the wage of U.S. workers who are involved in the production of tomatoes decreases.

Due to international trade Mexico exports tomatoes. As a result, the demand for domestic potatoes increases and the wage of Mexican workers who are involved in the production of tomatoes increases.

d. Effect of trade of poultry on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 8

Fig 5

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 9

Fig 6

Mexican Consumer:

In the figure 5, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the consumer surplus has increased by the shaded area equal to

U.S. Consumer

In the figure 6, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_,and. U.S exports the surplus to Mexico.

Due to export the price has increased in U.S. As a result, the consumer surplus has decreased by the shaded area equal to

e. Effect of trade of poultry on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 12

Fig 7

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 13

Fig 8

Mexican Producer

In the figure 7 the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the producer surplus has decreased by the shaded area equal to

U.S. Producer

In the figure 8, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S exports the surplus to Mexico.

Due to export the price has increased in U.S and the producer surplus has increased by the shaded area equal to

f. Effect of trade on Mexican and U.S poultry workers.

Poultry workers in Mexico are negatively affected but workers in USA are will benefit.

Due to international trade U.S. exports poultry to Mexico. As a result the demand for domestic poultry increases in the world market so, the wage of U.S. workers who are involved in the poultry farming increases.

Due to international trade Mexico imports poultry from U.S. As a result the demand for domestic poultry decreases so, the wage of Mexican workers who are involved in the poultry farming decreases.

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Answer 3

Question

Chapter 5, Problem 5P

To determine

Concept Introduction:

World Price: It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade.

Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve.

Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade. It is positively sloped curve.

Tariff: It imposes restriction on the goods that are imported. It is an indirect tax levied on the goods in case of import and export.

Consumer Surplus: It is difference between the amount that a consumer wants to pay and the real amount which he pays for goods and services.

Producer Surplus: It is difference between the amount which the producer wants to receive and the real amount which he receives for goods and services.

Expert Solution & Answer

Answer to Problem 5P

a. Effect of trade of tomatoes on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 1

Fig 1

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 2

Fig 2

Explanation of Solution

U.S. Consumer

In the figure 1 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import, the price has decreased in U.S and the consumer surplus has increased by the shaded area equal to

Mexican Consumer

In the figure 2 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the consumer surplus has decreased by the shaded area equal to

b. Effect of trade of tomatoes on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 5

Fig 3

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 6

Fig 4

U.S. Producer

In the figure 3 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import the price has decreased in U.S and the producer surplus has decreased by the shaded area equal to (X).

Mexican Producer

In the figure 4, the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.So, Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the producer surplus has decreased by the shaded area equal to

c. Effect of trade on Mexican and U.S tomato workers.

Tomato workers in U.S are negatively affected but the workers in Mexico will benefit.

Due to international trade, U.S. imports tomatoes. As a result, the demand for domestic potatoes decreases and the wage of U.S. workers who are involved in the production of tomatoes decreases.

Due to international trade Mexico exports tomatoes. As a result, the demand for domestic potatoes increases and the wage of Mexican workers who are involved in the production of tomatoes increases.

d. Effect of trade of poultry on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 8

Fig 5

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 9

Fig 6

Mexican Consumer:

In the figure 5, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the consumer surplus has increased by the shaded area equal to

U.S. Consumer

In the figure 6, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_,and. U.S exports the surplus to Mexico.

Due to export the price has increased in U.S. As a result, the consumer surplus has decreased by the shaded area equal to

e. Effect of trade of poultry on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 12

Fig 7

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 13

Fig 8

Mexican Producer

In the figure 7 the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the producer surplus has decreased by the shaded area equal to

U.S. Producer

In the figure 8, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S exports the surplus to Mexico.

Due to export the price has increased in U.S and the producer surplus has increased by the shaded area equal to

f. Effect of trade on Mexican and U.S poultry workers.

Poultry workers in Mexico are negatively affected but workers in USA are will benefit.

Due to international trade U.S. exports poultry to Mexico. As a result the demand for domestic poultry increases in the world market so, the wage of U.S. workers who are involved in the poultry farming increases.

Due to international trade Mexico imports poultry from U.S. As a result the demand for domestic poultry decreases so, the wage of Mexican workers who are involved in the poultry farming decreases.

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Answer 4

Question

Chapter 5, Problem 5P

To determine

Concept Introduction:

World Price: It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade.

Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve.

Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade. It is positively sloped curve.

Tariff: It imposes restriction on the goods that are imported. It is an indirect tax levied on the goods in case of import and export.

Consumer Surplus: It is difference between the amount that a consumer wants to pay and the real amount which he pays for goods and services.

Producer Surplus: It is difference between the amount which the producer wants to receive and the real amount which he receives for goods and services.

Expert Solution & Answer

Answer to Problem 5P

a. Effect of trade of tomatoes on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 1

Fig 1

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 2

Fig 2

Explanation of Solution

U.S. Consumer

In the figure 1 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import, the price has decreased in U.S and the consumer surplus has increased by the shaded area equal to

Mexican Consumer

In the figure 2 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the consumer surplus has decreased by the shaded area equal to

b. Effect of trade of tomatoes on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 5

Fig 3

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 6

Fig 4

U.S. Producer

In the figure 3 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import the price has decreased in U.S and the producer surplus has decreased by the shaded area equal to (X).

Mexican Producer

In the figure 4, the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.So, Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the producer surplus has decreased by the shaded area equal to

c. Effect of trade on Mexican and U.S tomato workers.

Tomato workers in U.S are negatively affected but the workers in Mexico will benefit.

Due to international trade, U.S. imports tomatoes. As a result, the demand for domestic potatoes decreases and the wage of U.S. workers who are involved in the production of tomatoes decreases.

Due to international trade Mexico exports tomatoes. As a result, the demand for domestic potatoes increases and the wage of Mexican workers who are involved in the production of tomatoes increases.

d. Effect of trade of poultry on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 8

Fig 5

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 9

Fig 6

Mexican Consumer:

In the figure 5, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the consumer surplus has increased by the shaded area equal to

U.S. Consumer

In the figure 6, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_,and. U.S exports the surplus to Mexico.

Due to export the price has increased in U.S. As a result, the consumer surplus has decreased by the shaded area equal to

e. Effect of trade of poultry on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 12

Fig 7

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 13

Fig 8

Mexican Producer

In the figure 7 the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the producer surplus has decreased by the shaded area equal to

U.S. Producer

In the figure 8, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S exports the surplus to Mexico.

Due to export the price has increased in U.S and the producer surplus has increased by the shaded area equal to

f. Effect of trade on Mexican and U.S poultry workers.

Poultry workers in Mexico are negatively affected but workers in USA are will benefit.

Due to international trade U.S. exports poultry to Mexico. As a result the demand for domestic poultry increases in the world market so, the wage of U.S. workers who are involved in the poultry farming increases.

Due to international trade Mexico imports poultry from U.S. As a result the demand for domestic poultry decreases so, the wage of Mexican workers who are involved in the poultry farming decreases.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 5, Problem 5P

To determine

Concept Introduction:

World Price: It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade.

Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve.

Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade. It is positively sloped curve.

Tariff: It imposes restriction on the goods that are imported. It is an indirect tax levied on the goods in case of import and export.

Consumer Surplus: It is difference between the amount that a consumer wants to pay and the real amount which he pays for goods and services.

Producer Surplus: It is difference between the amount which the producer wants to receive and the real amount which he receives for goods and services.

Expert Solution & Answer

Answer to Problem 5P

a. Effect of trade of tomatoes on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 1

Fig 1

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 2

Fig 2

Explanation of Solution

U.S. Consumer

In the figure 1 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import, the price has decreased in U.S and the consumer surplus has increased by the shaded area equal to

Mexican Consumer

In the figure 2 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the consumer surplus has decreased by the shaded area equal to

b. Effect of trade of tomatoes on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 5

Fig 3

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 6

Fig 4

U.S. Producer

In the figure 3 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import the price has decreased in U.S and the producer surplus has decreased by the shaded area equal to (X).

Mexican Producer

In the figure 4, the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.So, Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the producer surplus has decreased by the shaded area equal to

c. Effect of trade on Mexican and U.S tomato workers.

Tomato workers in U.S are negatively affected but the workers in Mexico will benefit.

Due to international trade, U.S. imports tomatoes. As a result, the demand for domestic potatoes decreases and the wage of U.S. workers who are involved in the production of tomatoes decreases.

Due to international trade Mexico exports tomatoes. As a result, the demand for domestic potatoes increases and the wage of Mexican workers who are involved in the production of tomatoes increases.

d. Effect of trade of poultry on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 8

Fig 5

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 9

Fig 6

Mexican Consumer:

In the figure 5, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the consumer surplus has increased by the shaded area equal to

U.S. Consumer

In the figure 6, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_,and. U.S exports the surplus to Mexico.

Due to export the price has increased in U.S. As a result, the consumer surplus has decreased by the shaded area equal to

e. Effect of trade of poultry on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 12

Fig 7

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 13

Fig 8

Mexican Producer

In the figure 7 the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the producer surplus has decreased by the shaded area equal to

U.S. Producer

In the figure 8, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S exports the surplus to Mexico.

Due to export the price has increased in U.S and the producer surplus has increased by the shaded area equal to

f. Effect of trade on Mexican and U.S poultry workers.

Poultry workers in Mexico are negatively affected but workers in USA are will benefit.

Due to international trade U.S. exports poultry to Mexico. As a result the demand for domestic poultry increases in the world market so, the wage of U.S. workers who are involved in the poultry farming increases.

Due to international trade Mexico imports poultry from U.S. As a result the demand for domestic poultry decreases so, the wage of Mexican workers who are involved in the poultry farming decreases.

Answer 6

Chapter 5, Problem 5P

To determine

Concept Introduction:

World Price: It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade.

Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve.

Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade. It is positively sloped curve.

Tariff: It imposes restriction on the goods that are imported. It is an indirect tax levied on the goods in case of import and export.

Consumer Surplus: It is difference between the amount that a consumer wants to pay and the real amount which he pays for goods and services.

Producer Surplus: It is difference between the amount which the producer wants to receive and the real amount which he receives for goods and services.

Expert Solution & Answer

Answer to Problem 5P

a. Effect of trade of tomatoes on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 1

Fig 1

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 2

Fig 2

Explanation of Solution

U.S. Consumer

In the figure 1 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import, the price has decreased in U.S and the consumer surplus has increased by the shaded area equal to

Mexican Consumer

In the figure 2 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the consumer surplus has decreased by the shaded area equal to

b. Effect of trade of tomatoes on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 5

Fig 3

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 6

Fig 4

U.S. Producer

In the figure 3 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import the price has decreased in U.S and the producer surplus has decreased by the shaded area equal to (X).

Mexican Producer

In the figure 4, the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.So, Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the producer surplus has decreased by the shaded area equal to

c. Effect of trade on Mexican and U.S tomato workers.

Tomato workers in U.S are negatively affected but the workers in Mexico will benefit.

Due to international trade, U.S. imports tomatoes. As a result, the demand for domestic potatoes decreases and the wage of U.S. workers who are involved in the production of tomatoes decreases.

Due to international trade Mexico exports tomatoes. As a result, the demand for domestic potatoes increases and the wage of Mexican workers who are involved in the production of tomatoes increases.

d. Effect of trade of poultry on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 8

Fig 5

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 9

Fig 6

Mexican Consumer:

In the figure 5, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the consumer surplus has increased by the shaded area equal to

U.S. Consumer

In the figure 6, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_,and. U.S exports the surplus to Mexico.

Due to export the price has increased in U.S. As a result, the consumer surplus has decreased by the shaded area equal to

e. Effect of trade of poultry on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 12

Fig 7

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 13

Fig 8

Mexican Producer

In the figure 7 the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the producer surplus has decreased by the shaded area equal to

U.S. Producer

In the figure 8, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S exports the surplus to Mexico.

Due to export the price has increased in U.S and the producer surplus has increased by the shaded area equal to

f. Effect of trade on Mexican and U.S poultry workers.

Poultry workers in Mexico are negatively affected but workers in USA are will benefit.

Due to international trade U.S. exports poultry to Mexico. As a result the demand for domestic poultry increases in the world market so, the wage of U.S. workers who are involved in the poultry farming increases.

Due to international trade Mexico imports poultry from U.S. As a result the demand for domestic poultry decreases so, the wage of Mexican workers who are involved in the poultry farming decreases.

Answer 7

Chapter 5, Problem 5P

To determine

Concept Introduction:

World Price: It is the equilibrium price at which export demand curve intersects import supply curve. It is equilibrium price with trade.

Domestic Demand Curve: The curve which shows how the quantity demanded by changes due to change in the price when there is no trade. It is negatively sloped curve.

Domestic Supply Curve: The curve which shows how the quantity supplied changes due to change in the price when there is no trade. It is positively sloped curve.

Tariff: It imposes restriction on the goods that are imported. It is an indirect tax levied on the goods in case of import and export.

Consumer Surplus: It is difference between the amount that a consumer wants to pay and the real amount which he pays for goods and services.

Producer Surplus: It is difference between the amount which the producer wants to receive and the real amount which he receives for goods and services.

Answer 8

Expert Solution & Answer

Answer to Problem 5P

a. Effect of trade of tomatoes on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 1

Fig 1

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 2

Fig 2

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

U.S. Consumer

In the figure 1 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import, the price has decreased in U.S and the consumer surplus has increased by the shaded area equal to

Mexican Consumer

In the figure 2 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the consumer surplus has decreased by the shaded area equal to

b. Effect of trade of tomatoes on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 5

Fig 3

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 6

Fig 4

U.S. Producer

In the figure 3 the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S imports the deficit from Mexico.

Due to import the price has decreased in U.S and the producer surplus has decreased by the shaded area equal to (X).

Mexican Producer

In the figure 4, the equilibrium without trade is at point A where domestic price and quantity of tomato is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.So, Mexico exports the surplus to U.S.

Due to export the price has increased in Mexico and the producer surplus has decreased by the shaded area equal to

c. Effect of trade on Mexican and U.S tomato workers.

Tomato workers in U.S are negatively affected but the workers in Mexico will benefit.

Due to international trade, U.S. imports tomatoes. As a result, the demand for domestic potatoes decreases and the wage of U.S. workers who are involved in the production of tomatoes decreases.

Due to international trade Mexico exports tomatoes. As a result, the demand for domestic potatoes increases and the wage of Mexican workers who are involved in the production of tomatoes increases.

d. Effect of trade of poultry on U.S and Mexican consumer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 8

Fig 5

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 9

Fig 6

Mexican Consumer:

In the figure 5, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the consumer surplus has increased by the shaded area equal to

U.S. Consumer

In the figure 6, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_,and. U.S exports the surplus to Mexico.

Due to export the price has increased in U.S. As a result, the consumer surplus has decreased by the shaded area equal to

e. Effect of trade of poultry on U.S and Mexican producer.

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 12

Fig 7

MACROECONOMICS(LL)W/SAPLING, Chapter 5, Problem 5P , additional homework tip 13

Fig 8

Mexican Producer

In the figure 7 the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and Mexico imports the deficit from U.S.

Due to import of poultry the price has decreased in Mexico and the producer surplus has decreased by the shaded area equal to

U.S. Producer

In the figure 8, the equilibrium without trade is at point A where domestic price and quantity of poultry is P_Aand Q_Arespectively. The world price is P_W. The quantity demanded at world price is Q_Dand the quantity supplied at the world price is Q_S_.and U.S exports the surplus to Mexico.

Due to export the price has increased in U.S and the producer surplus has increased by the shaded area equal to

f. Effect of trade on Mexican and U.S poultry workers.

Poultry workers in Mexico are negatively affected but workers in USA are will benefit.

Due to international trade U.S. exports poultry to Mexico. As a result the demand for domestic poultry increases in the world market so, the wage of U.S. workers who are involved in the poultry farming increases.

Due to international trade Mexico imports poultry from U.S. As a result the demand for domestic poultry decreases so, the wage of Mexican workers who are involved in the poultry farming decreases.

Answer 12

Ch. 5.A - Prob. 1P Ch. 5.A - Prob. 2P Ch. 5.A - Prob. 3P Ch. 5.A - Prob. 4P Ch. 5 - Prob. 1QFT Ch. 5 - Prob. 2QFT Ch. 5 - Prob. 3QFT Ch. 5 - Prob. 1P Ch. 5 - Prob. 2P Ch. 5 - Prob. 3P

Answer to Problem 5P

Explanation of Solution

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