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- A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on imported flat screen televisions. Using the four-step analysis, how do you think the tariff reduction will affect the equilibrium price and quantity of flat screen TVS?Suppose the nation of Isoland is an importer of textiles and is looking for a way to raise government revenue. The following graph shows the effect of a tariff on textile imports. Price of TextilesQuantity of TextilesDemand Supply PWPW+TABCDEFGQS,1QS,2QD,2QD,1 Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including both imported and domestically produced textiles). Compared to the free trade scenario, the quantity of textiles consumed in Isoland will , and the quantity produced in Isoland will under a textile consumption tax. The following table shows the effect of an import tariff on the nation of Isoland. Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption. Before Tariff or Tax Under Tariff Under Consumption Tax After Change After Change Consumer Surplus…The following graph shows intra-industry trade in the United States for two types of yogurts: Yoplait (a famous French brand) and Dannon (a famoud American brand): -1 13 12 11 10 A 9 8G 7 2 Price 1. 0 0 2 US Market for Yoplait (Y) Supply of Yoplait 5 6 7 Loss of LQM. Gain of LQM. Loss of KLMR. Demand for Yoplait Gain of KLMR. Yoplak 9 10 11 12 13 14 12 Price 11 10 A US Market for Dannon (D) 2 3 4 5 7 Supply of Dannon Refer to the above graph. At the price of $6 for D, intra-industry trade leads to which of the following for the United States: 8 Demand for Dannon Dannon 9 10 11 12 13
- Why does the efficiency of an import tariff depend on the price elasticity of demand?Kawmin is a small country that produces and consumesjelly beans. The world price of jelly beans is$1 per bag, and Kawmin’s domestic demand andsupply for jelly beans are governed by the followingequations:Demand: QD = 8 − PSupply: QS = P,where P is in dollars per bag and Q is in bags of jellybeans.a. Draw a well-labeled graph of the situation inKawminif the nation does not allow trade.Calculatethe following (recalling that the area ofa triangle is ½ × base × height): the equilibriumprice and quantity, consumer surplus, producersurplus, and total surplus.b. Kawmin then opens the market to trade. Drawanother graph to describe the new situation inthe jelly bean market. Calculate the equilibriumprice, quantities of consumption and production,imports, consumer surplus, producer surplus, andtotal surplus.c. After a while, the Czar of Kawmin respondsto the pleas of jelly bean producers by placinga $1 per bag tariff on jelly bean imports. On a graph, show the effects of…Country C imports 80,000 metric tons of steel from Country U and produces domestically80,000 metric tons per year. The world price of steel is $500 per metric ton. Assuming linearschedules, research analysts estimated the price elasticity of domestic supply to be 0.50 and theprice elasticity of domestic demand to be -0.25 in the current market equilibrium. Country Cimposes an import duty of $150 per metric ton that caused the world price to fall by 10%. What are the terms of trade of the Country C steel market after the tariff was imposed? Explain the welfare effects of both countries
- The following graph shows intra-industry trade in the United States for two types of yogurts: Yoplait (a famous French brand) and Dannon (a famous American brand): 13 12 11. 10 A 9 7 1. -1 0 -11 O AKL. O AGH. Supply of Yoplait 3 O GHLK. O HPL. US Market for Yoplait (Y) Demand for Yoplait Yoplak 10 11 12 13 14 15 -1 12 Price 11 10 A 0 US Market for Dannon (D) Refer to the above graph. At the price of $6, intra-industry trade leads to a consumers surplus for Y equal to: Supply of Dannon Demand for Dannon Dannon 10 11 12 13price supply domestic price- $35 import price + tarif $20 demand 100 300 500 650 850 quantity Based on the graph above, if there is a tariff of $15 per unit imposed on imports in this market: A. 750 units will be imported and tariff revenue to the government will be $11.250 B. 650 units will be imported and tariff revenue to the government will be $9,75O C. 350 units will be imported and tariff revenue to the government will be $5.250 D. 300 units will be imported and tariff revenue to the government will be $4,500Suppose that Estonia, which is a"small economy, and it can import plastic chairs at a price of 20 per unit The domestic supply curve of plastic chairs is the following: S=40+10P And the demand curve in Estonia for plastic chairs is: D=800-5P In addition, each unit of plastic chair production yields a marginal social benefit of 10. a) Calculate the total effect on welfare of a tariff of 15 per unit levied on imports. Only typed answer
- Think about the mobile-market is in equilibrium. Suppose that, as part of a trade policy, the government imposes the tax on mobile-import. Will this affect the supply or the demand? Why? How this will affect the consumer surplus and producer surplus? Show graphically with before- and after-effects on the same graph. How will this change the equilibrium price and quantity of mobile? Explain your reasoning.1. Your textbook discusses the benefits of cheaper imports on pages 171-173. Draw a graph that shows the effects on consumer and producer surplus (gain or loss) that result from a country importing a good. 2. Recently, China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 115 – 1/15Q Supply: P = 55 + 1/15Q Where P is Yuan per bushel of soybeans and Q is 10 million bushels per year. The world price for soybeans is ¥65/bushel. Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including the Domestic Demand curve, Domestic Supply curve, the World Price, and the Price with tariffs. 3. How many bushels of soybeans can the US export to China if there are no tariffs? How many bushels with the imposed tariff? 4. Who are the greatest benefactors of China’s…The figure below illustrates the impact of an export subsidy as imposed by a large country. No imports are permitted. Price aib f D D₁ h So Si Sa Da O The producer surplus falls by area (a + b). O The producer surplus increases by area (a + b +c+d). The producer surplus falls by area (a+b+c+e+f+g+h). O The producer surplus increases by area (a + b + c). Domestic price with subsidy World price World price with subsidy Quantity What is the net impact on the producer surplus of the export subsidy provided by the domestic government?
