Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971509
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 9, Problem 7PA
Sub part (a):
To determine
Importing and the effects of importing to the country.
Sub part (b):
To determine
Importing and the effects of importing to the country.
Sub part (c):
To determine
Importing and the effects of importing to the country.
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7. Consider a country that imports a good from abroad.For each of following statements, state whether it istrue or false. Explain your answer.a. “The greater the elasticity of demand, the greaterthe gains from trade.”b. “If demand is perfectly inelastic, there are no gainsfrom trade.”c. “If demand is perfectly inelastic, consumers donot benefit from trade.”
If a smaller country imports a good (electronics) from a larger country, is it beneficial for the smaller countryto impose quotas on the good coming from the larger country.
Will this affect the consumers of electronics, the domestic producers of electronics and the government?
If an economy formerly in autarky opens to trade, and discovers that there is excess supply of a good from the world market, then they would expect to see domestic consumers buying __________ of a good, domestic producers selling __________, and at a __________ price.
a. more; less; higher
b. more; more; higher
c. more; less; lower
d. less; more; higher
e. less; more; lower
Chapter 9 Solutions
Principles of Macroeconomics (MindTap Course List)
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- When a tariff is imposed on a good, the price to consumers _____ and the amount imported _____.arrow_forward23. What happens to the relative price of a good as a result of trade if there is an increasing return to scale in the industry producing the good. Is it still converging to a price between domestic and foreign price of the good? Draw a graph to answer.arrow_forwardIf the demand of an imported good is perfectly inelastic, a tariff imposed on its import will be: a. Paid entirely by the domestic producers of the good b. Paid entirely by the consumers of the good c. Split between the consumers and producers of the good d. Split between the domestic and foreign producers of the goodarrow_forward
- Consider a small country that exports good Z. Some of the total quantity of Z that is domestically produced is consumed by domestic consumers and the rest of it is exported. Then suppose that the government imposed a ban (a prohibition) on Z being exported. Show the effects of this export ban using a carefully labelled demand and supply diagram. On your diagram, shade-in the area that represent the deadweight loss caused by the export ban (please do not shade-in any other areas) and explain your reasoning.arrow_forwardThe 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.arrow_forward1. Answer question a, b, c, d, e and f.arrow_forward
- The figure below shows the hypothetical domestic supply and demand for baseball caps in the country of Spain. Domestic Supply and Demand for Baseball Caps Spain 10 Sa 8 X 2 1 0 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps is €1 and there are no Import restrictions on this product. Assume that Spanish consumers are indifferent between domestic and Imported baseball caps. Instructions: Enter your answers as whole numbers. a. What quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand b. What quantity of baseball caps will be imported? thousand Now suppose a tariff of €3 is levied against each Imported baseball cap. c. After the tariff is Implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand d. After the tariff Is Implemented, what quantity of baseball caps will be imported? thousand Price (€ per cap) 65 3₂arrow_forwardExport Subsidy. Suppose the home country exports cloth and imports food. Show the impact of an export subsidy by the home country using the relative demand and relative supply curves for cloth. What is the impact on the home country's terms of trade? Make sure you label your graph and explain your reasoning.arrow_forwardThe figure below shows the hypothetical domestic supply and demand for baseball caps in the country of Spain. Domestic Supply and Demand for Baseball Caps Spain Price (€ per cap) 10 X 10 20 30 40 50 60 70 80 90 100 9 8 7 5 3 2 1 0 Sd Ddarrow_forward
- If a nation that imports a good imposes a tariff, itwill increasea. the domestic quantity demanded.b. the domestic quantity supplied.c. the quantity imported from abroad.d. the efficiency of the equilibriumarrow_forwardSteel 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:…arrow_forwardSuppose Country X exports good A and imports good B. And, Country Y exports good B and imports good A. When country Y imposes an import tariff, what happens to the terms of trade in these countries and what is the impact of this on economic welfare (assume no other factor determines economic welfare).arrow_forward
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