(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800, domestic consumers will purchase producers, units from domestic producers and units from foreign Price 2,000 Domestic supply 1,000 Domestic demand 1,000 500 Quantity of engines
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- Explain how a subsidy on agricultural goods like sugar adversely affects the income of foreign producers of imported sugar.Suppose Colombia is open to free trade in the world market for soybeans. Because of Colombia’s small size, the demand for and supply of soybeans in Colombia do not affect the world price. The following graph shows the domestic soybeans market in Colombia. The world price of soybeans is PW=$400 per ton.15. Data and empirical observations have validated the fact thata. Sectors specific to export industries tend to lose from international trade, while sectorsspecific to import-competing industries tend to gain.b. All sectors tend to lose.c. All sectors tend to gain.d. None of the above is true.
- Suppose that the demand curve for vegetable fibre in Euroland is given by QD = 40 − 2P , and that the supply curve is given by QS = 2/3 (P) (i.e. two thirds of P). The world price of vegetable fibre is €9 per unit.If there no restrictions on trade the level of imports of fibre into Euroland would beA. 26 unitsB. 16 unitsC. 4 unitsD. 12 unitsFor all questions, refer to the graph on the reverse side. Use this graph for 1 – 4. The graph represents the market for coffee. Estimation may be necessary, so show work. Assuming the market outcome, and a world price of $6.50 calculate the following: Price Qddom Qsdom Imports or exports Redo all parts of #1 assuming a world price of $3.50. Redo all parts of #1 assuming a world price of $3.50 and a tariff of $0.50. Redo all parts of #1 assuming a world price of $3.50 and a quota of 60. Name a good that will see increased sales due to the tariff or quota above. Name a good besides coffee that will see decreased sales due to the tariff or quota above. Suppose that 1 US$ = 1.5 South African Rand. Also, suppose that the representative good, peanut butter, is $3 per jar in the US and 4 Rand per jar in SA. How will this situation affect the exchange market for U.S. dollars? Explain/show the effect(s) of these prices. Include the initial effect(s), the market…26. What are the implied relative price of wine in international trade? a) 1/3 yard/bottle b) 3 yards/bottle c) 1/2 yard/bottle d) -1/2 yard/bottle e) 2 yards/bottle f) 1/3 bottle/yard g) 2 bottles/yard h) -3 bottles/yard i) 2/3 bottles/yard
- 1.4 If free trade exists between the United States and France, what are the highest and lowestlevels for the price of an automobile (expressed in terms of computers)? Motivate youranswer by stating which level favours the United States and France.Now, suppose that Island is a large exporting country with the following demand and supply functions and the free-trade world price is $5,000 per unit. D = 900,000 − 150P and S = 100,000 + 50P The Island government offers an export subsidy that increases the domestic market price to $5,500 and lowers the world price to $4,500. However, starting next month, the Island government will be removing the export subsidy in compliance with the latest international trade pact. A. What is the impact of the removal of the subsidy on domestic consumers? B. What is the change in producer surplus due to the movement to free trade? C. What is the net effect of moving to free trade on Island welfare?Given total potential output of Maize 250,000 tons and Peanuts 750,000tons; and Consumption of Maize 200,000 tons and Peanuts 150,000 tons; what is the relative price of maize in terms of peanuts?
- The small nation of Capralia has an abundant stock of Pashmina goats, a breed that yields high‑quality cashmere. Capralia's authorities are still debating whether to open their economy to international trade. The international price of cashmere is $70,000 per metric ton, and the Capralian cashmere sells for $50,000 per metric ton.given the following table for obtaining points on country A's offer curve: possible term of trade Qty of imports of good Y demand qty of exports of good X supplied 1X:1Y 40 units 40 units 1X:2Y 90 units r 1X:3Y 120 units s in this table, a. r = 45 units, s = 40 units b. r = 180 units, s = 40 units c. r = 45 units, s = 360 units d. r = 180 units, s = 360 unitsSuppose there is trade between Spain and France Suppose that each produce only two goods, and that they each have $140,000 of resources to spend on the production of these goods. France• France produces one unit of oil at a cost of $5 per unit. • France can produce one unit of beef at a cost of $17 per unit. Spain• Spain produces one unit of oil at a cost of $11 per unit. • Spain produces one unit of beef at a cost of $21 per unit. a)Which country has the comparative advantage in producing oil? Which has the comparative advantage in producing beef? b)Draw the Production Possibilities Frontier (PPF) for Spain under autarky. Draw this PPF with oil on the x-axis and beef on the y-axis. Label both the x-intercept and y-intercept Suppose now that Spain and France start trading with each other at a rate of 3 units of oil for 1 unit of beef. C) Draw the Production Possibilities Frontier (PPF) for Spain under this trade agreement. D) Draw this PPF with oil on the x-axis and beef on the…