The impact of international trade over Brazil's quantity and price of sugar is to be determined.

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Chapter 9, Problem 4IAPA

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The impact of international trade over Brazil's quantity and price of sugar is to be determined.

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Suppose that there are only two countries (the United States and Mexico) and only two goods ( Automobiles and Corn). In the U.S., it takes 120 labor hours to produce a car and 15 labor hours to produce a bushel of corn. In Mexico, it takes 200 labor hours to produce a car and 30 labor hours to produce a bushel of corn. Ignoring tariffs, taxes, the repeal of USMCA, or the Border Wall, which countries should be exporting which good?

7. A graphical comparison of tariffs and quotas Borzia and Ardon are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of rugs to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $2,000. In Borzia, the government decides to impose a tariff of $3,000 per rug; in Ardon, the government implements a quota of 20 million rugs. Assume that Borzia and Ardon have identical domestic demand (Do) and supply (S) curves for rugs as shown on the following graph. Under these conditions, the price of rugs is $5,000 per rug in each country. PRICE (Dollars per rug) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Do D₁ X 0 P... 10 20 30 50 60 70 80 40 QUANTITY (Millions of rugs) 90 S 100 (?)