2) Figure below illustrates the steel market for Mexico, assumed to be a "small" country that is unable to affect the world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican steel industry is able to obtain trade protection. Mexican producers' supply with and without subsidy are also provided. Figure: Mexico's Steel Trade vwith and w/o non-tariff barriers 1000 800 600 400 200 Tons of Steel a) Consider the above figure. With free trade, Mexico imports steel at a quantity of _ b) Consider the above figure. With free trade, Mexico's consumer surplus and producer surplus will respectively equal to: $ ) Assume that the Mexican government imposes an import quota equal to 2 tons of steel. If foreign exporters behave as monopoly buyers and Mexican importers behave as competitive sellers, the overall welfare loss of the tons. and $
2) Figure below illustrates the steel market for Mexico, assumed to be a "small" country that is unable to affect the world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican steel industry is able to obtain trade protection. Mexican producers' supply with and without subsidy are also provided. Figure: Mexico's Steel Trade vwith and w/o non-tariff barriers 1000 800 600 400 200 Tons of Steel a) Consider the above figure. With free trade, Mexico imports steel at a quantity of _ b) Consider the above figure. With free trade, Mexico's consumer surplus and producer surplus will respectively equal to: $ ) Assume that the Mexican government imposes an import quota equal to 2 tons of steel. If foreign exporters behave as monopoly buyers and Mexican importers behave as competitive sellers, the overall welfare loss of the tons. and $
Chapter19: International Trade
Section: Chapter Questions
Problem 2.6P
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