Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 9, Problem 2PA
To determine
The impact of tariff on automobiles.
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What would happen to U.S. economic welfare if the U.S. eliminated tariffs on solar panel imports?
A. U.S. economic welfare would increase because of the social gains from increased U.S. consumption of solar panels
B. U.S. economic welfare would decrease because the social gains from increased U.S. production of solar panels would be less than the social costs associated with increased U.S. consumption of solar panels
C. U.S. economic welfare would decrease because the social gains from increased U.S. consumption of solar panels would be less than the social costs inflicted on U.S. solar panel producers
D. U.S. economic welfare would increase because the social gains from increased U.S. production of solar panels would exceed the social costs associated with increased U.S. consumption of solar panels
1
Price
Price after trade
OA+B+C+E+G
OA+B
OA+B+C+D+E+F+G
○ C+0
C
G
A
Di
B
E
Supply
Imports after tariff
Refer to the graph above: Consider the economy depicted in the graph and assume there is international trade if the government imposed a tariff, what would the total surplus
be?
World Price + tariff
World Price
Demand
Quantity
Chapter 9 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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- Price P1 D 01 Quantity The graph above shows domestic supply and demand with trade in a SMALL country. With trade, this country can purchase at the world price, Pw. Suppose that this country imposes a $5 per unit tariff on this good. Which of the following is true? O There will not be deadweight losses due to this tariff, since it is a small country. The domestic price will rise by $5. O Consumers will be better off. Producers will not increase domestic production.arrow_forwardWhen a tariff is imposed on a good, the price to consumers _____ and the amount imported _____.arrow_forwardAssume a simple world in which the U.S. exports soft drinks and beer to France and imports wine from France. If the U.S. imposes large tariffs on the French wine, explain the likely impact on the values of the U.S. beverage firms, U.S. wine producers, the French beverage firms, and the French wine producers.arrow_forward
- Vietnam has a policy of free trade in motorcycles which are sold in world markets at a price of 10,000 per motorcycle. Under free trade, Vietnam produces 100,000 motorcycles and imports 100,000 motorcycles. To provide some protection to the domestic industry, Vietnam imposes an import tariff of $1500 per motorcycle. With this tariff in place, production in Vietnam rises by 5,000 motorcycles and consumption drops by the same amount. Calculate the effects of the tariff on: a. Consumer Surplus b. Producer Surplus c. Government Revenues d. Overall Welfare e. If the tariff imposed by the Vietnamese had led to small reduction in world prices of, say, 250 dollars, how, qualitatively, would the welfare calculations (a), (b), (c) and (d) above change?arrow_forwardThe US decides to impose a tariff on Avocados of $0.75 each Under Free Trade you have the following information: $1 per Unit World and US Price: Domestic Consumption 25 Billion Units 1 Billion Units Domestic Production: Under a Tariff you have the following information: New US Price: $1.75 per Unit Domestic Consumption: Domestic Production: 21 Billion Units 5 Billion Units (a) How much does the government gain in tariff revenue? (b) How much do domestic producers gain? (c) How much do consumers lose? (d) What is net national or "dead weight" loss?arrow_forwardQUESTION 11 In the figure given below, Mexico, the importing country in free trade, imposes a binding import quota on wheat exported by the U.S. The import demand curve for wheat is represented by MDMEX and the export supply curve is represented by XS US e represents the binding import quota imposed by Mexico, and QFT is the free trade equilibrium output and PFT is the free trade price level. PAUT and the price level post import quota in the U.S. and Mexico respectively. prex 0. represent AUT represent the autarky price level in the U.S. and Mexico respectively. and XSUS PMex Aut PMex PFT pus pus Aut Which of the following conditions must be satisfied to attain quota equilibrium? a. The price in the U.S after the quota should be equal to the price in Mexico. b. The price in the U.S. after the quota should be lower than the autarky price level. c. The price in Mexico after the quota should be higher than the price in the U.S. d. The price in Mexico after the quota should be equal to the…arrow_forward
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