EBK PRINCIPLES OF ECONOMICS
7th Edition
ISBN: 8220102958395
Author: Mankiw
Publisher: CENGAGE L
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Chapter 9, Problem 4PA
Subpart (a):
To determine
The arguments against and for imports and international trade.
Subpart (b):
To determine
The arguments against and for imports and international trade.
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In the picture below is the full question. The highlighted one is my guess which is wrong.
Which of the following best explains how subsidies work as a trade restriction?
A)They increase competition for a new business, forcing it to be more productive, and lowering prices for consumers.
B)They limit the import of foreign goods and create shortages.
C)They place a tax on foreign goods, making foreign good expensive, increasing demand for domestic goods(this one is wrong)
D)Governments pay producers, offsetting costs, increasing supply, lowering prices, and reducing foreign competition.
Consider the market for sugar in the United States depicted in the figure to the
right. Assume the world price of sugar is $0.04 per pound, and at that price the
United States can buy as much sugar as it wants without causing the world price
to rise.
Now suppose a tariff imposed by the government completely eliminates trade.
As a result of the tariff, consumers will be
surplus, and producers will be
off in terms of consumer
off in terms of producer surplus.
Use the traingle drawing tool to indicate the total loss of surplus for the United
States as a result of the tariff by shading in domestic dead weight loss. Property
label this shaded area.
Carefully follow the instructions above, and only draw the required objects.
Price of sugar (per pound)
0.36
0.32-
0.28-
0.24-
0.20
0.16
0.12-
0.08
0.04+
0.00+
0
Supply
World Price
Demand
4 12 16 20 24 28 32 36 40
Quantity of sugar (billion pounds per year)
Odu
B. If Oman imposing an import tariff on the used car imports from UAE (Foreign),
explain the cost and benefits tariff as an importing country to Oman and an exporting
county to UAE(Use appropriate diagram to explain your answer).
Your answer can limit based on following theoretical assumptions:
Suppose that there are two countries Home (Oman) and Foreign.
Both countries consume and produce used cars which can be costless
transported between these countries.
In each country, it is a competitive industry.
Suppose that in the absence of trade the price of used cars at Home exceeds
the corresponding price at Foreign.
C. If Oman allowing an export subsidy to
Diagrammatically explain its effects on the Oman market (Exporting country) and as
an importing country to UAE market.
Your answer can limit based on following theoretical assumptions:
our vegetable exporters to UAE,
Suppose that there are two countries Home (Oman) and Foreign (UAE).
Both countries consume and produce vegetables, which…
Chapter 9 Solutions
EBK PRINCIPLES OF ECONOMICS
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- please help me with this questionarrow_forwardAssume that the functions of a demand curve and of a supply curve of a small country M for commodity X are Dx = 130 – Px and Sx = -10 + Px respectively. The unit price of commodity X imported from the rest of the world is 10 USD in the condition of the free trade. Draw the graph and calculate the increase of the producer’s surplus, the decrease of the consumer’s surplus, and the government revenue if the country M would impose the import tariff at the rate of 20% on the commodity X imported from the rest of the world?arrow_forwardConsider the case of the following large country (all prices are measured in euros, and quantities are measured in single units):– Domestic demand curve: P = 3600 –3Q– Domestic supply curve: P = 2Q– World free trade price of imports = 140 euros per unit– When the tariff is introduced, domestic prices rise by exactly one third of the amount of the tariff. Calculate the following. Also show your workout. Draw a diagram depicting the importing country market under free trade and with a tariff. Under free trade equilibrium:The quantity consumed domestically: ___________________________________________________The quantity produced domestically: ___________________________________________________The quantity imported: ______________________________________________________________ With a 30 euro specific tariff :The equilibrium quantity consumed domestically: _________________________________________The equilibrium quantity produced domestically: __________________________________________The…arrow_forward
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