A small open economy has demand for goat cheese given by P = 20 - 0.5Q and supply given by P = Q - 4. Goat cheese is traded around the world at a price of $4 per tonne. Suppose that the government imposes a quota of 13 tonnes on goat cheese. How will consumer surplus be affected, relative to the free trade scenario?

A small open economy has demand for goat cheese given by P = 20 - 0.5Q and supply given by P = Q - 4. Goat cheese is traded around the world at a price of $4 per tonne. Suppose that the government imposes a quota of 13 tonnes on goat cheese. How will consumer surplus be affected, relative to the free trade scenario?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: International Trade

Section: Chapter Questions

Problem 2.6P

See similar textbooks

Similar questions

Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. A) Consider the use of import tariff vs. import quota in Home country that will result in the same amount of good Y imports and the domestic price of good Y. If quota rents are given to Foreign country, which policy, i.e., import tariff vs. import quota, is preferable by Home country on the basis of its effect on social welfare? Explain your reasoning.
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?
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.
Question 2: Suppose Qd= 100- 10P Qs = 10P a. Draw a graph using the supply and demand equation assuming no trade. Calculateequilibrium P, Q, consumer, producer and total surplus. b. Draw another graph assuming that trade is allowed. Calculate quantity domesticallyconsumed, domestically produced, imports, consumer surplus, producer surplus assumingworld price =$3. c. What happens to consumer surplus and producer surplus after trade? Does total surplusincrease or decrease after trade? Show your calculations. i need the the diagram
Hi can you please help me with the calculations and working? Question 1 Assume D: p=2-q and S: p=q are demand and supply What's the autarky equilibrium price and quantity, consumer surplus, producer surplus and total welfare? Suppose the world price is pw=3 and that local firms can sell as much as they want at that price; what is consumer surplus and producer surplus? Has the ability to trade at the world prices increased welfare? By how much?
The idea that an action should be undertaken if and only if the benefits exceed the costs is known as the concept of Oeconomic efficiency. O public welfare maximization. marginal comparative advantage. O monetary construction of values.
A small country’s demand curve is given by Q=36-2P and its supply curve is given by Q=4P-12. Assume the world is currently in free trade and that the price under free trade is $4. What is the prohibitive specific import tariff for this economy (i.e. the tariff that would reduce net exports to zero)?Group of answer choices a.6 b.5 c.4 d.8
A small country’s demand curve is given by Q=36-2P and its supply curve is given by Q=4P-12. Assume the world is currently in free trade and that the price under free trade is $4. What is the prohibitive specific import tariff for this economy (i.e. the tariff that would reduce net exports to zero)? Group of answer choice a.6 b.5 c.4 d.8
1. Home has 1,200 units of labor available. It can produce two goods, apples and bananas.The unit labor requirement in apple production is 3, while in banana production it is 2.a. Graph Home’s production possibility frontier.b. What is the opportunity cost of apples in terms of bananas?c. In the absence of trade, what would the price of apples in terms of bananas be?Why?2. Home is as described in problem 1. There is now also another country, Foreign, with alabor force of 800. Foreign’s unit labor requirement in apple production is 5, while inbanana production it is 1.a. Graph Foreign’s production possibility frontier.b. Construct the world relative supply curve.3. Now suppose world relative demand takes the following form: Demand for apples/demandfor bananas = price of bananas/price of apples.a. Graph the relative demand curve along with the relative supply curve.b. What is the equilibrium relative price of apples?c. Describe the pattern of trade.d. Show that both Home and Foreign gain…
home cheese alc=1hr/kg wine alw=2hrs/gallon foreign cheese alc*=6hrs/kg wine alw*=3hrs/gallon Calculate the Home country's opportunity cost of producing cheese. In which product does the Home (Foreign* ) country has an absolute advantage? Show in which product does the Home (Foreign* ) country has comparative advantage? Calculate the relative supply (RS) With trade, what is the equilibrium range that the relative price of cheese to wine will settle? Supposing that the intersection of RS and RD occurs at PC /PW = 1, what is the implication?
How would direct subsidies to key industries be preferable to tariffs or quotas?
Home has 1,200 units of labor available. It can produce two goods, apples and bananas.The unit labor requirement in apple production is 3, while in banana production it is 2.a. Graph Home’s production possibility frontier.b. What is the opportunity cost of apples in terms of bananas?c. In the absence of trade, what would the price of apples in terms of bananas be?Why?2. Home is as described in problem 1. There is now also another country, Foreign, with alabor force of 800. Foreign’s unit labor requirement in apple production is 5, while inbanana production it is 1.a. Graph Foreign’s production possibility frontier.b. Construct the world relative supply curve.