Assume the United States is an importer of televisions and there are no trade restrictions. U.S. consumers buy 1 million televisions per year, of which 400,000 are produced domestically and 600,000 are imported. a. Suppose that a technological advance among Japanese television manufacturers causes the world price of televisions to fall by $100. Draw a graph to show how this change affects the welfare of U.S. consumers and U.S. producers and how it affects total surplus in the United States. b. After the fall in price, consumers buy 1.2 million televisions, of which 200,000 are produced domestically and 1 million are imported. Calculate the change in consumer surplus, producer surplus, and total surplus from the price reduction. c. If the government responded by putting a $100 tariff on imported televisions, what would this do? Calculate the revenue that would be raised and the deadweight loss. Would it be a good policy from the standpoint of U.S. welfare? Who might support the policy? d. Suppose that the fall in price is attributable not to technological advance but to a $100 per television subsidy from the Japanese government to Japanese industry. How would this affect your analysis?

Question
Assume the United States is an importer of televisions and there are no trade restrictions. U.S. consumers buy 1 million televisions per year, of which 400,000 are produced domestically and 600,000 are imported. a. Suppose that a technological advance among Japanese television manufacturers causes the world price of televisions to fall by $100. Draw a graph to show how this change affects the welfare of U.S. consumers and U.S. producers and how it affects total surplus in the United States. b. After the fall in price, consumers buy 1.2 million televisions, of which 200,000 are produced domestically and 1 million are imported. Calculate the change in consumer surplus, producer surplus, and total surplus from the price reduction. c. If the government responded by putting a $100 tariff on imported televisions, what would this do? Calculate the revenue that would be raised and the deadweight loss. Would it be a good policy from the standpoint of U.S. welfare? Who might support the policy? d. Suppose that the fall in price is attributable not to technological advance but to a $100 per television subsidy from the Japanese government to Japanese industry. How would this affect your analysis?

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Economics

International Trade

Related Economics Q&A

Find answers to questions asked by students like you.

Q: 9. NASA is the sole employer of zero-gravity training chamber operators. Given the supply schedule f...

A: NASA is the sole employer of zero-gravity training chamber operators. Marginal Expenditure of the op...

Q: Provide short answer for the following? Diminishing marginal utility.         2. Indifference curv...

A: 1.Diminishing marginal utility. it implies that keeping other things unchanged as we consume more un...

Q: For a principal borrowed under %14 nominal interest rate, compounded annually, a bank offers two alt...

A: Given: Nominal Interest rate = 14% Time period = 35 years Alternative 1: Base payment is 1000 in 1st...

Q: 1. Suppose you are the governor of a state. Should lockdown continue, at the cost of more unemployme...

A: No, Should not be continued. Lockdown was supported at first, when declarations pronounced another, ...

Q: Health Care is also assessed when gauging a nation’s development? True or False

A: The DALY (Disability-Adjusted Life Year) is every now and again utilized as a proportion of illness ...

Q: How will the following changes affect the natural rate of unemployment? Specifically, do they increa...

A: Unemployment refers to individuals who are in turn employable and are also actively seeking for a jo...

Q: Are my answers right? I don't know if I'm doing this right.

A: Short run is defined as the time period in which atleast one of the factors used is fixed and others...

Q: Explain how Oman Cement Company - a building materials company - can expand its business in Iran usi...

A: Modes of entry are the methods or way by which local or national businesses can enter into an intern...

Q: Quatro Co. issues bonds dated January 1, 2019, with a par value of $880,000. The bonds’ annual contr...

A: Fixed income securities refers to the debt instruments that pays a fixed periodic interest to the in...