As a result of a tariff on an imported good, O domestic producers are better off because they sell more goods at the same price. O domestic producers are better off because they sell more goods at a higher price. O domestic producers are better off because they sell the same quantity of goods at a higher price. O domestic consumers are better off because there are more domestically produced goods available. O domestic consumers are neither better off nor worse off because imports do not change.

As a result of a tariff on an imported good, O domestic producers are better off because they sell more goods at the same price. O domestic producers are better off because they sell more goods at a higher price. O domestic producers are better off because they sell the same quantity of goods at a higher price. O domestic consumers are better off because there are more domestically produced goods available. O domestic consumers are neither better off nor worse off because imports do not change.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter19: Economic Development

Section: Chapter Questions

Problem 2.3P

See similar textbooks

Similar questions

"Only answer c-d ones" (a) Calculate the opportunity cost of producing one additional unit of good x in terms of units of good y in Home and Foreign. The opportunity cost of producing one additional unit of good x in Home or foreign is the amount of good y that must be given up to produce it. At Home, one worker can produce 2 units of good x or 1 unit of good y. Thus, to produce one additional unit of good x, half a unit of good y must be given up. The opportunity cost in Home is 0.5 units of good y. In Foreign, one worker can produce 1 unit of good x or 2 units of good y. To produce one additional unit of good x, two units of good y must be given up. The opportunity cost in Foreign is 2 units of good y. (b) Derive the production possibilities frontier (PPF) for Home and Foreign and plot it in a graph with good x in the horizontal axis and good y in the vertical axis. To derive the production possibilities frontier (PPF) for Home and Foreign, we use the labor market clearing condition…
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?
Consider two countries, Home and Foreign and two goods appples and bananas. In the Home country the unit labour requiremrents for apples and bananas are repectively 3 and 2. In the Foreign country the unit labour requirements for apples and bananas are 5 and 1 respectively. The Home country has a labour force of 1200 and the Foreign country has a labour force of 800. Graph the Production Possiblity Frontiers for each of the two countries. What are the prices of apples in terms of bananas in both countries in the absence of trade? Why? Construct the world relative supply function. Suppose that the world relative demand takes the following form: demand for ap- ples/demand for bananas = banana price/apple price. Draw the world relative de- mand curve superimposed on the world relative supply curve. What is the equilibrium relative price of apples under free trade? Describe the pattern of trade. Show that each of the two countries gain from trade. Suppose that instead of 1200…
The table below presents production schedule of apples and bananas in the country of mistania - assume that these are the only two goods that Mistania produces. Each row represents a specific set of apples and bananas that Mistania could produce. Suppose Mistania was currently at Senario C, producing 10 bananas and 80 apples. According to the data in this table, if Mistania wanted to produc 1 more banana, how many fewer apples will it need to produce? Scenario Bananas Apples A 0 100 B 5 90 C 10 80 D 15 70 E 20 60
Suppose countries A and B produce and consume (assuming convex preferences) apples and bananas using only labour. Unit labour cost for apples in country A are 1 and 2 in country B. Unit labour cost for bananas are 2 in country A and 5 in country B. The labour force is the same in both countries, and given by 100 in each country. Which three of the following statements are true? A Country B has a comparative advantage in producing bananas. B Allowing for international trade, the production of 50 apples and 50 bananas can occur in a global market equilibrium feasible, but not in market equilibria under autarky. C Each country has an absolute advantage. D Allowing for international trade, the production of 50 apples and 50 bananas is feasible, but not under autarky. E Under autarky, the relative price for apples (price for apples/price for banans) equals 0.5 in country A and 0.4 in country B. F Country A will produce bananas, with or…
Suppose there are two countries, Home and Foreign, that produce two goods, fish (F) and edamame (E), using only labor. In the Home country 6 units of labor are required to produce each unit of fish and the same for each unit of edamame. In the Foreign country, 2 units of labor is required to produce each fish and 3 units of labor are required for each unit of edamame. Each country has a labor force of 30 units available for production. Suppose further that consumers in both countries have identical Leontief preferences, utility function U(CF, CE) = min(CF, CE), meaning that they want to consume the two goods in a fixed proportion of one-to-one, i.e. CF = CE (there is no substitution between the goods). Suppose now that the labor force of the Home country is 6 times as big (i.e. 180 units, instead of 30). How does this increase in labor force at Home change the pattern of trade? Will the gains from trade for the Home country be higher or lower now? What happens to the welfare of the…
Suppose countries A and B produce and consume (assuming convex preferences) apples and bananas using only labour. Unit labour cost for apples in country A are 2 and 1 in country B. Unit labour cost for bananas are 5 in country A and 4 in country B. The labour force is the same in both countries, and given by 100 in each country. Which three of the following statements are true? Each country has an absolute advantage. Allowing for international trade, the production of 100 apples and 20 bananas can occur in a global market equilibrium, but not in a market equilibria under autarky. Country A will produce apples, with or without international trade. Under autarky, the relative price for apples (price for apples/price for bananas) equals 0.4 in country A and 0.25 in country B. Country B has an absolute advantage in producing bananas. Allowing for international trade, the production of 60 apples and 40 bananas is feasible, but…
England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 30 scones per hour or 2 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 4 sweaters per hour. Who will produce sweaters? Each week you purchase 4 units of good A, 2 units of good B, and 3 units of good C. In week 1 the prices of the three goods (in A, B, C order) were ($2, $3, $4). In week 2 the prices of the three goods were ($2.05, $2.90, $4.20). The cost of buying the basket of goods in week 1 was $ . The cost of buying the basket of goods in week 2 was $ . The percentage change in the cost of the basket of goods was %. Round to two decimal places.
3 1. Define comparative cost advantage. Suppose there are two persons in the society named Anika and Abrar. Both of them produce a particular quantity of two goods i.e., bread and ice-cream. Given terms of trade 6:10, do they gain out of trade? Explain.
It takes Andy 45 minutes to complete a load of laundry and 15 minutes to wrap a present. It takes Bob 60 minutes to complete a load of laundry and 30 minutes to wrap a present. Which of the following statements is true? Select one : O A. Bob's opportunity cost of doing a load of laundry is wrapping 3 presents. O B. Bob has a comparative advantage in doing laundry. O C. Bob has a comparative advantage in wrapping a present. O D. Andy's opportunity cost of wrapping a present is doing 3 loads of laundry. O E. Bob has an absolute advantage in doing laundry.
Q3. 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. Draw Home's production possibility frontier. Label the curve PPF. (Clearly show the maximum amount of the two goods that can be produced on your graph) b. What is the opportunity cost of apples in terms of bananas? (Enter your response rounded to one decimal place.) c. In the absence of trade, what would the price of apples in terms of bananas be? There is now also another country, Foreign, with a labor force (L) of 800. Foreign's unit labor requirement in apple production is 5, while in banana production it is 1. d. Derive the equation for Foreign's production possibility frontier. e. Graph Foreign’s production possibility frontier.
Tarriffs: Suppose the market price for solar panels in the U.S. will be $500 per panel in the absence of any trade in solar panels. The price of solar panels in the world market is $295 per panel. a) What will be the price of solar panels in the U.S. if the U.S. has free trade in solar panels? Diagrammatically show the gains from trade in solar panels. (Change in welfare as a result of free trade in solar panels compared to the situation of no trade. Show how the different components of welfare such as consumer surplus and producer surplus change.) b) Now suppose the Trump administration imposes a quota. That is, it says that it will allow the import of only 10 million panels a year (With free trade the imports would have been more than 10 million). Will the price of solar panels rise or fall in the US? Who will gain from the quota? Who will lose? Diagrammatically show the welfare impact of the quota compared to the free trade situation. (Again show the change in welfare in…