EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Chapter 9, Problem 3QR
To determine
The changes in
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Your textbook discusses the benefits of cheaper imports on pages 171-173. Draw a graph that shows the effects on consumer and producer surplus (gain or loss) that result from a country importing a good.
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0
150
$1500
$625
$2800
$865
Price of
Calculators
$27
12
7
2
300 400
Domestic
Supply
Domestic
Demand
World
Price
Quantity of
Calculators
The figure above shows the domestic market for calculators in Haiti. What is the change in
total surplus in Haiti because of trade?
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.
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- 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_forwardFor all questions, consider this graph: Save Price 8 7 6 5 4- 3 2 0 Tariff Domestic supply Domestic demand 10 20 30 40 50 60 70 80 World price Quantity Initially, this small nation doesn't trade. Calculate its consumer surplus before any trade occurs, carefully following all numeric instructions.arrow_forwardThe united states is a big exporter of animals feeds, corn ,meat, fruits, vegetables and other agriculture commodities.Explain how foreign trade affects the domestic supply of such products.arrow_forward
- Analyze the Economic Effects of Tariffs and Quotas. Give examples.arrow_forwardVietnam 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_forwardIdentify and explain who will make and lose money from this tariff. Identify the people and organizations that will benefit from the tariff. Identify the people and organizations that will suffer because of the tariff. How will the tariff impact your company?arrow_forward
- Georgia and Moldova are famous for their quality of wine and the United Kingdom decides to start importing from them. There is an 5£ tariff on imported wine. Considering the graph below, where does the UK buy its wine from and how much does it cost on the domestic market? Price per bottle £10 £7 Moldovan price £5 Georgian price UK demand for imported wine Quantity (millions of bottles per year) 10 15 22 Suppose the UK joins a trade bloc with Moldova and maintains its 5£ tariff on wine from outside the bloc. a) What will the new domestic price be? b) How much do consumers gain/lose? c) How about the government? d) Is there trade creation or trade dıversion or both? e) How much does the UK gain/lose?arrow_forwardCan someone answer d,e, and f?arrow_forwardYou have just been put in charge of trade policy for Malawi. Coffee is a recent crop that is growing well and the Malawian export market is developing. As such,Malawi coffee is aninfant industry.Malawi coffee producers come to you and ask for tariff protection from cheap Tanzanian coffee. What sorts of policies will you enact? Explain.arrow_forward
- What is the effect of placing tariffs on products imported into the U.S. from other countries? Are there any problems with this?arrow_forwardPrice P1 P3 Y V P2 U D Quantity Q1 Q4 Qs Q3 Figure 4 Domestic market for a good Figure 4 shows a country's domestic market for a good. There is perfect competition. The supply curve, S, is the domestic producers' supply curve for the good. D is the domestic consumers' demand curve. With free trade, the price in the domestic economy equals the world price, P2. However the domestic government has imposed a tariff on imports that has raised the price of the good in the domestic economy from P2 to P3. Which area or areas of the diagram show the government's tariff revenue? Select one answer. Select one: O Z O w plus Y ох O X plus Z Narrow_forwardPlease help without free trade. With free trade$ consumer surplus= product Surplus= When Bolivia allows free trade, the country's consumers surplus ____ by ____. And producer surplus _____. By _____. So, the net effect of international trade on Bolivia's total surplus is a ____ of ______ Thank you.arrow_forward
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