EBK PRINCIPLES OF ECONOMICS
8th Edition
ISBN: 8220103600453
Author: Mankiw
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 3PA
Subpart (a):
To determine
The impact of developing the production in one important country.
Subpart (b):
To determine
The impact of developing the production in one important country.
Sub part(c):
To determine
The impact of developing the production in one important country.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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.
When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing.
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:…
Chapter 9 Solutions
EBK PRINCIPLES OF ECONOMICS
Knowledge Booster
Similar questions
- When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing.arrow_forwardAssume that Canada is an importer of televisions and that there are no trade restrictions. Canadian consumers buy 1.2 million televisions per year, of which 600,000 are produced domestically and 600,000 are imported. Suppose that a technological advance among Japanese television manufacturers causes the world price to fall $800 to $700. Draw a graph to show how this change affects the welfare of Canadian consumers and Canadian producers and how it affects total surplus in Canada. Label the diagram carefully to show all the areas using letters of alphabets. (Do not shade the areas). After the fall in price, consumers buy 1.4 million televisions, of which 400,000 are produced domestically and 1 million are imported. Calculate the change (this will be only the area either gained or lost by consumers and producers) in consumer surplus, producer surplus and total surplus due to price reduction. Provide numerical answers by calculating the area of change in surplus due to fall in…arrow_forward5. Welfare effects of a tariff in a small còuntry Suppose Burundi is open to free trade in the world market for malze. Because of Burundl's small size, the demand for and supply of malze in Burundi do not affect the world price. The followling graph shows the domestic malze market in Burundi. The world price of malze Is Pw =$350 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer's surplus (CS) when the economy is at the free-trade equllibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producers' surplus (PS). 710 Domestic Demand Domestic Supply 670 CS 630 590 550 PS 510 W 470 430 390 350 310 3 9 12 15 18 21 24 27 30 QUANTITY (Thousands of tons of maize) If Burundi allows international trade in the market for maize, it will import tons of maize. Now suppose the Burundian government decides to impose a tariff of $40 on each imported ton of maize. After the tariff, the price Burundian…arrow_forward
- On the following graph, use the green point (triangle symbol) to shade consumer surplus in Germany after China's clothing industry expands. Then use the purple point (diamond symbol) to shade producer surplus. When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing. Suppose the following graph represents the market for clothing in Germany prior to the expansion of China's clothing industry. Germany is an(IMPORT OR EXPORT) of clothing because the world price is(ABOVE OR BELOW) the domestic equilibrium price.arrow_forwardNow suppose the Zambian government decides to impose a tariff of $60 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes S tons of soybeans. and Zambia will import Use the following graph to show the effects of the $60 tariff. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff. PRICE (Dollars perton) 490 460 430 400 370 340 310 280 250 220 190 0 Domestic Demand Domestic Supply 20 40 60 80 100 120 140 QUANTITY (Tons of soybeans) P W 160 180 200 World Price Plus Tariff CS PS Government…arrow_forwardThe world price of wine is below the price that would prevail in Canada in the absence of trade. Assume that Canadian imports of wine are a small part of total world wine production. The following graph shows the Canadian market for wine under free trade. Use the green triangle (triangle symbol) to shade consumer surplus when Canada is open to trade. Then use the purple triangle (diamond symbol) to shade producer surplus in this case. Price of Wine Domestic Demand Quantity of Wine Domestic Supply World Price Consumer Surplus Producer Surplus (?)arrow_forward
- On the following graph, use the green point (triangle symbol) to shade consumer surplus in the Denmark after China's clothing industry expands. Then use the purple point (diamond symbol) to shade producer surplus. Market for Clothing in Denmark Domestic Supply Domestic Demand Consumer Surplus Producer Surplůs New World Price Quantity of Clothing v the Overall, exporting countries the fall in the world price of clothing, and importing countries price change. Price of Clothingarrow_forwardThe 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_forwardUse the Graph below to answer the questions about International Trade: Price P1 P2 P3 A B D F с E D -Quantity a. At equilibrium, what area represents Consumer Surplus? Blank 1 and Blank 2. b. At equilibrium, what area represents Producer Surplus? Blank 3 and Blank 4. c. Which Price Level would make this country become an importer of this good? Blank 5 d. Which Price Level would make this country become an exporter of this good? Blank 6arrow_forward
- When China's supply of clothing increases, the increase in world supply lowers the world price of clothing. a. Draw an appropriate diagram to analyze how this change in the world price affects consumer surplus, producer surplus, and total surplus in a nation that imports clothing, such as the U.S. Label (i) the old and new world prices, (ii) the change in quantity demanded by consumers, and (iii) the change in quantity supplied by domestic producers. Make a table that shows consumer surplus, producer surplus, and total surplus at the old world price and new world price. b. Now draw an appropriate diagram to show how this change in price affects consumer surplus, producer surplus, and total surplus in a nation that exports clothing such as Bangladesh. Label (i), (ii), and (iii) as above, and make a similar table. C. Compare your answers from (a.) and (b.). What are similarities and what are the differences? Which country should be concerned about the expansion of the Chinese clothing…arrow_forward[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.] [Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences. How to draw the graph?arrow_forwardHômework (Ch 09) Show the effects of the $200 tariff on the following graph. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff. 1200 Domestic Demand Domestic Supply 1100 World Price Plus Tariff 1000 900 CS 800 700 PS 600 500 Pw 400 Government Revenue 300 200 140 160 180 200 DWL 20 40 60 80 100 120 QUANTITY (Tons of soybeans) PRICE (Dollars per ton)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc