Based on Figure 48, choose the correct statement. Assume that Nation 2 imposes aquota (30X) on imports of X (an agricultural commodity).Figure 48 Partial equilibrium effects of an import quotaPy (S)251020 25 304050 55 60 65 70O 1)Given the increase in demand from Dx to D'x, the price of X increases to$2.5, and the quota is 20X.2)Given the increase in demand from Dx to D'x, the price of X increases to$2.5, and the quota is 55X.3)Given the increase in demand from Dx to D'x, the price of X increases to $2,and the quota is the same.O 4) Given the increase in demand from Dx to D'x, the price of X increases to$2.5, and the quota is the same.

The involvement of a nation in the more open international trade increases the well-being of the…

Based on Figure 48, choose the correct statement. Assume that Nation 2 imposes a quota (30X) on imports of X (an agricultural commodity). Figure 48 Partial equilibrium effects of an import quota Py (5) 2.5 Ds 10 20 25 30 50 55 60 65 70 40 O 11 Given the increase in demand from Dx to D'x, the price of X increases to 1) $2.5, and the quota is 20X. 2) Given the increase in demand from Dx to D'x, the price of X increases to $2.5, and the quota is 55X. 3) Given the increase in demand from Dx to D'x, the price of X increases to $2, and the quota is the same. 4) Given the increase in demand from Dx to D'x, the price of X increases to $2.5, and the quota is the same.

Based on Figure 48, choose the correct statement. Assume that Nation 2 imposes a quota (30X) on imports of X (an agricultural commodity). Figure 48 Partial equilibrium effects of an import quota Py (5) 2.5 Ds 10 20 25 30 50 55 60 65 70 40 O 11 Given the increase in demand from Dx to D'x, the price of X increases to 1) $2.5, and the quota is 20X. 2) Given the increase in demand from Dx to D'x, the price of X increases to $2.5, and the quota is 55X. 3) Given the increase in demand from Dx to D'x, the price of X increases to $2, and the quota is the same. 4) Given the increase in demand from Dx to D'x, the price of X increases to $2.5, and the quota is the same.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: International Trade

Section: Chapter Questions

Problem 2.5P

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Similar questions

Now, suppose that Home applies an import quota limiting the amount Foreign can sell to 2 units. The quota licenses are allocated to local producers. Calculate the consumer surplus and producer surplus with the quota
Using demand and supply, illustrate the effects of a quota imposed by the Ghanaiangovernment on Cote d’Ivoire cocoa. Show the Cote d’Ivoire cocoamarket and the Ghanaiancocoamarket.
Suppose a domestic market in a country is perfectly competitive. The domestic market is small and cannot influence the international price. Assume the country imports from the international market. Which of the following is correct about the effect of an import quota? Group of answer choices A) Increases domestic producer surplus B) Increases import quantity C) Increases total surplus in the domestic market D) Decreases total domestic quantity supplied E) None of the above
Part F. If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. Part G. Assume that instead of a specific tariff, an import quota will be used on good Y. What is the amount of the quota that will have identical effects (in terms of amount of good Y imports and the domestic price of good Y) as the specific tariff of $15? Explain your reasoning. Part H. 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.
Consider a competitive market served by many domestic and foreign firms. The domestic demand for these firms’ product is Qd = 600 − 2P. The supply function of the domestic firms is QSD = 200 + P, while that of the foreign firms is QSF = 250. a. Determine the equilibrium price and quantity under free trade. b. Determine the equilibrium price and quantity when foreign firms are constrained by a 100-unit quota. c. Are domestic consumers better or worse off as a result of the quota? d. Are domestic producers better or worse off as a result of the quota?
Suppose Home is a small exporter of wheat. At the world price of 100 US dollars per tonne, Home growers export 20 tons of wheat. Now suppose the Home government decides to support its domestic producers with a specific export subsidy of 40 US dollars per tonne. Use Figure 1 to answer the following questions: (a) Explain why consumer and producer surplus can be used to gauge the change in welfare caused by the export subsidy on individuals and firms? (b) What is the quantity exported by Home under free trade and with the export subsidy? (c) Calculate the effect of the export subsidy on consumer surplus, producer surplus, and government revenue; depict each of these in a graph. What is the overall net effect of the export subsidy on Home welfare?
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(22) How would the creation of an import quota affect the market for a good? Imported supply increases Domestic supply decreases Market price increases Consumer surplus increases Producer surplus decreases
Using the previous scenario: The US market of sunflower described by the following domestic supply and demand equations: QDUS = 8000 – 4 P QSUS = -2000 + 6 P where QDUS and QSUS represent the quantities demanded and supplied (in tons) and P is the price per ton of sunflower oil (in $). Now add this information: In 2008, China entered into the World Trade Organization and became the largest importer of US sunflower oil. Assume the Chinese import demand for sunflower oil from the US in 2008 was QDCHINA = 20000 – 10 P Given this information, what was the new equilibrium price of sunflower oil in 2008? a. $1600 b. $1400 c. $1500 d. $10,500 Given your answer in the previous question regarding equilibrium price with trade, how much sunflower oil does China purchase from US producers? a. 5000 tons b. 4000 tons c. 2000 tons d. 3000 tons Calculate the increase in U.S. producers total revenue as a result of trade. a. $10,000,000…
Refer to above Figure. Suppose the free-trade price is $85. Also, assume an export subsidy of $10. Calculate the total cost to the government for the export subsidy. $10,000 $14,000 $5,000 $19,000.
Suppose the market for steel is expressed as follows: Domestic demand: p = 40 - 0.2q, or q = 200 - 5p Domestic supply: p = 0.2q, or q = 5p Domestic supply (foreign): p = 0.1q, or q = 10p a) What is the equilibrium price and quantity if there is free trade, with no restriction on imports? b) What is the equilibrium price and quantity if the government imposes a binding import quota of 20 units? Depict parts a and b on a single graph. c) How are US steel firms affected by the quota? US automakers? Explain briefly.
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