Microeconomics (6th Edition)
6th Edition
ISBN: 9780134106243
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 9, Problem 9.4.14PA
To determine
Effect of quota on steel imports.
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28. Suppose IP is the international trade price and this country's government imposes a $3 tariff on imports of this good, what will be the net loss to this economy?
29. Suppose IP is the international trade price and this country's government imposes a $3 tariff on imports of this good, how much revenue will the government collect?
30. Suppose IP is the international trade price and this country's government imposes a 6 unit quota on imports of this good, what will be the net loss to this economY?
The year is 2005. For many years the US has restricted textile imports from China using quotas. Now under WTO the US is having to eliminate the quotas and allow china to export textiles to the US free of quotas. Use the principles of demand and supply to analyze the effect of this action on: the US textile industry, the US textile consumers, the textile industry of Vietnam (another textile producing country) that has been exporting textile to the US without quotas. Remember to tell us: who gains, and who loses in each case.
#3
PRICE (Dollars per tonne)
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News Analysis: Nailing Down Metal Tariffs
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Consider a hypothetical example of trade in aluminum between the United States and China. For simplicity, assume that China is the only source of
U.S. aluminum imports. The following graph shows the U.S. market for aluminum. Note that in the absence of any trade, the market price for
aluminum in the United States is $500 per tonne, and the equilibrium quantity is 50 million tonnes per month.
Use the green area (triangle symbol) to show U.S. consumer surplus under free trade with China, and use the purple area (diamond symbol) to show
U.S. producer surplus under free trade with China.
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Domestic Demand
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Consumer Surplus
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Producer Surplus
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Free Trade Price
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QUANTITY OF ALUMINUM (Millions of tonnes per month)
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Chapter 9 Solutions
Microeconomics (6th Edition)
Ch. 9 - Prob. 9.1.1RQCh. 9 - Prob. 9.1.2RQCh. 9 - Prob. 9.1.3RQCh. 9 - Prob. 9.1.4PACh. 9 - Prob. 9.1.5PACh. 9 - Prob. 9.1.6PACh. 9 - Prob. 9.1.7PACh. 9 - Prob. 9.2.1RQCh. 9 - Prob. 9.2.2RQCh. 9 - Prob. 9.2.3PA
Ch. 9 - Prob. 9.2.4PACh. 9 - Prob. 9.2.5PACh. 9 - Prob. 9.2.6PACh. 9 - Prob. 9.2.7PACh. 9 - Prob. 9.2.8PACh. 9 - Prob. 9.2.9PACh. 9 - Prob. 9.3.1RQCh. 9 - Prob. 9.3.2RQCh. 9 - Prob. 9.3.3RQCh. 9 - Prob. 9.3.4RQCh. 9 - Prob. 9.3.5PACh. 9 - Prob. 9.3.6PACh. 9 - Prob. 9.3.7PACh. 9 - Prob. 9.3.8PACh. 9 - Prob. 9.3.9PACh. 9 - Prob. 9.3.10PACh. 9 - Prob. 9.3.11PACh. 9 - Prob. 9.3.12PACh. 9 - Prob. 9.3.13PACh. 9 - Prob. 9.4.1RQCh. 9 - Prob. 9.4.2RQCh. 9 - Prob. 9.4.3PACh. 9 - Prob. 9.4.4PACh. 9 - Prob. 9.4.5PACh. 9 - Prob. 9.4.6PACh. 9 - Prob. 9.4.7PACh. 9 - Prob. 9.4.8PACh. 9 - Prob. 9.4.9PACh. 9 - Prob. 9.4.10PACh. 9 - Prob. 9.4.11PACh. 9 - Prob. 9.4.12PACh. 9 - Prob. 9.4.13PACh. 9 - Prob. 9.4.14PACh. 9 - Prob. 9.4.15PACh. 9 - Prob. 9.5.1RQCh. 9 - Prob. 9.5.2RQCh. 9 - Prob. 9.5.3RQCh. 9 - Prob. 9.5.4RQCh. 9 - Prob. 9.5.5PACh. 9 - Prob. 9.5.6PACh. 9 - Prob. 9.5.7PACh. 9 - Prob. 9.5.8PACh. 9 - Prob. 9.5.9PACh. 9 - Prob. 9.5.10PA
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- Show graphically that for any tariff, there is an equivalent quota that would give the same result. What would be the difference, then, between the two types of trade barriers? Hint: It is not something you can see from the graph.arrow_forwardThe country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 34.6 and Table 34.7. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell? What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell? Sketch two supply and demand diagrams, one for each country, in the situation before trade. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade. If the Land of Submarines imposes an anti- dumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country. Does your general answer change if the Land of Submarines imposes an import quota of 70?arrow_forwardConsider carefully the following statement: "The real price of timber has fallen 40% in the US, and thousands of timber workers have been forced to look for other jobs." Is this a potentially valid economic or political argument to introduce tariff on timber imported into the US? Explain your answer. Edit View Insert Format Tools Table Paragraph v |B I в I U Av v T? v 12pt varrow_forward
- Is the following statement TRUE or FALSE? Briefly explain why. "If the OPEC countries decide to restrict their oil exports, it will decrease the world price of this product."arrow_forwardThe following graph represents the domestic supply and demand for wheat in Turkey. $100 55 50 40 75 150 180 240 340 450 Millions of tons a. In the absence of trade, what is the equilibrium price and equilibrium quantity? b. The government opens the wheat market to free trade and U.S enters the Turkish market, pricing wheat at $40 per ton. What will happen to the domestic price of wheat? What will be the new domestic quantity supplied and domestic quantity demanded? How much wheat will be imported from U.S? c. The government imposes a $10 per ton tariff on all imported wheat. What will happen to the domestic price of wheat? What will be the new domestic quantity supplied and domestic quantity demanded? How much wheat will now be imported from U.S? Price per tonarrow_forwardBecause Zambia participates in international trade in the market for soybeans, it will import tons of soybeans. Now suppose the Zambian government decides to impose a tariff of $10 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes , and Zambia will import tons of soybeans. Use the following graph to show the effects of the $10 tariffarrow_forward
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