A market in Country B, which is a small economy, is described by the following supply and demand curves, respectively: QS=P-5 QD=40-2P where Q and QD are quantity supplied and demanded, and P is price. Suppose the world price is $10. The government in Country B places $3 tariff (per unit) on imported goods. What is the tariff revenue that the government collects?
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- a) What are the criticisms advanced on Jacob Viner's analysis? b) According to this model, if the import price of a manufactured product increases because of a Common External Tariff (CET) of the Customs Union, what are the price and volume effects on domestic consumers? and foreign producers?The Uruguay Round of the GATT began a process of phasing out the use of voluntary export restraints. Why did they come into widespread use in the 1980s? For instance, given that VERs (voluntary export restraints) are a form of quotas, and that they create quota rents and a larger reduction in national welfare than tariffs, why did nations use them instead of tariffs?Consider a small country that exports steel. Supposethat a “pro-trade” government decides to subsidizethe export of steel by paying a certain amount foreach ton sold abroad. How does this export subsidyaffect the domestic price of steel, the quantity ofsteel produced, the quantity of steel consumed, andthe quantity of steel exported? How does it affectconsumer surplus, producer surplus, governmentrevenue, and total surplus? Is it a good policy fromthe standpoint of economic efficiency? (Hint: Theanalysis of an export subsidy is similar to the analysisof a tariff.)
- Suppose Egypt wants to open its trade borders tothe world market for natural gas. What will determine whether Egypt becomes a net-exporter ornet-importer of natural gas? If Egypt becomes anet-exporter, will domestic supply be equal to, lessthan, or greater than domestic demand?Suppose the domestic shoe demand and supply equations in a small open economy are: P = 168-4?D P = 24+2?S On the other hand, the shoe demand and supply equations of the large open economy are: Let's assume: P = 360- 6?D P = 40 + 2?S A) Suppose the large country imposes a customs tax of $ 12 per unit of good on top of the free trade price, and the smaller country drops it below $ 4. For the Large country of customs tax application in the light of above information What would happen to these: 1- In the welfare of the consumer. 2- In the welfare of the manufacturer.The domestic supply and demand equations for good A are given by Qs= P - 60 and Qd= 360-2P. The world price of the good is $90. At the current world price, how much of good A is produced domestically and how much is consumed? How much of the good is the country importing from the world? Graph the inverse domestic supply and demand equations with the world price. Show on the graph and calculate the producer surplus and consumer surplus. Suppose the government wants to support domestic producers by imposing a tariff of $30 per unit of good A imported. Compute the effect on producer and consumer surplus, the amount of revenue gained by the government and the deadweight loss. If you were a consumer of this good, would you vote for or against the new tariff? Explain your reasoning.
- Assume that you have been hired by an International Organization to be consulted on variousissues that the country Motherland faces. For this exercise, assume that Motherland is a smallagricultural economy. (a) Motherland imports electronics from the United States. The government of Motherland is considering to impose quotas on these electronics imports coming from the United States. Would you recommend it? Explain your answer. In your explanation, distinguish the effect on the consumers of electronics, the domestic producers of electronics and the government. (b)The government of Motherland wants to jump start industrial production. Over time the main objective is to convert this agricultural economy into an industrial nation. On the basis of the experiences of Argentina and Singapore, what policies would you suggest?a) Suppose the demand in the rich country is P=100-Q and supply is P=2Q. Draw this demand and supply diagram in autarky - a closed economy where no imports or exports are possible - with the standard axes (P vertical, Q horizontal). Mark carefully on the diagram the demand curve , the supply curve , and then work out the equilibrium (include your working out, not just the final result) . Show that welfare under autarky is 1,666.67 b) Suppose now that country A can trade freely. Add on the previous diagram a world price of 40 ; explain why no goods will be bought or sold at the autarky price anymore ; how much is demanded at world price 40?; how much is supplied? ; explain what happens to the difference between supply and demand at that world price . How large is welfare under free trade Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Consider a small country. The domestic (home) demand is Qd = 120−3P and supply is Qs = 2P −20 whereQs and Qd are the quantity supplied and demanded, respectively, and P is the price per unit.A) Suppose the government impose a quota that limits the quantity of imports to 20 units. Find thenew equilibrium price, domestic quantity supplied and demanded, and quantity imported.B) Calculate Consumer surplus, producer surplus, and total surplus, with free tradeC) Calculate Consumer surplus, producer surplus, tax revenue, total surplus, and deadweight loss withtrade and the tariff in place.D) How would the deadweight loss and total surplus differ with trade and a quota in place, be specific.
- a) What is a tariff ? Does a tariff have a result from an import quota? b) Suppose a tariff allowed an industry to create 200,000 jobs paying an average of $22,500 per year. Before the tariff consumers bought 3 billion units (60% imported) at a price of $30. After the tariff they bought 2.75 billion units (none imported) at a price of $36. How much did total consumer spending on the good increase and how much per new job? c) True or False and explain: Free trade allows countries to specialize in producing those goods in which they have the comparative advantage, which in turn, results in increased world production and income.Most economists believe that tariffs area. a good way to promote domestic economicgrowth.b. a poor way to raise general economic well-being.c. an often necessary response to foreigncompetition.d. an efficient way for the government to raiserevenue.If protective import−restricting tariffs are imposed by a country, in the majority of cases that nation's producers end up A. receiving a lower profit for the domestic good than they otherwise would. B. producing less of the good than they otherwise would. C. receiving a lower price for the good than they otherwise would. D. receiving a higher price for the good than they otherwise would.