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Import quotas and import tariffs have qualitatively similar effects on equilibrium outcomes in competitive markets.
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- 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 aboveThe market for rice in an East Asian country has demand and supply given by QD = 28 – 4P and QS = -12 + 6P, where quantities denote millions of bushels per day. a. If the domestic market is perfectly competitive, find the equilibrium price and quantity of rice. Compute the triangular areas of consumer surplus and producer surplus. b. Now suppose that there are no trade barriers and the world price of rice is $3. Confirm that the country will import rice. Find QD, QS, and the level of imports, QD – QS. Show that the country is better off than in part (a), by again computing consumer surplus and producer surplus. c. The government authority believes strongly inSuppose a domestic market in a country is perfectly competitive. The domestic market is small and cannot influence the international price. Assume the country exports to the international market. Which of the following is correct about the effect of a tax per unit purchased in the country? a. The domestic producers supply more to the domestic market b. Increases export quantity c. Increases total quantity supplied d. Decreases total quantity supplied e.None of the above
- To determine: The impact of export subsidy.Export subsidies, such as for aircraft producers, can in theory increase domestic welfare when firms have pricing power or returns to scales are present. True FalseConsider a competitive market served by many domestic and foreign firms. The domestic demand for these firms' product is Qd=700-1.5P. The supply function of the domestic firms is Qsd=50+0.5P, while that of the foreign firms is Qsf=200. 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.
- 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?Let us consider the case of Good X in Malaysia. The demand and supply functions for Good X in Malaysia are Demand function: QD=361−2P Supply function: QS=23+P Find out the number of imports at Pw=70 (Please give your answers in two decimal places. ) If the import quota was 80 units what will be the new price in the Malaysian market? (Please give your answers in two decimal places.) How many Good X will be produced domestically after the quota has been implemented? (Please give your answers in two decimal places.) How many Good X will be consumed by domestic consumers after the quota has been implemented? (Please give your answers in two decimal places.) What will be the import after implementing an import quota of 80 units (Please give your answers in two decimal places.) What is the percentage change in imports after the imposition of the import quota? (Please give your answers in two decimal places, Multiply by 100 to convert into a percentage (if you get 0.40 then submit 40 in the…The domestic market of a small country is described by the following supply and demand curves: Qs = P-50; Qd = - P + 100. World price P = 50. Determine the volume of losses and benefits of domestic producers and consumers, provided that there is free competition in the global and domestic markets.
- A numerical restriction on amount of a good imported is called a Group of answer choices quota. trade tax. tariff. supply tax.China’s entry into the World Trade Organization (WTO) in 2001 created more competition between local and foreign firms, and also provided China greater access to the market for exports. This was particularly true in the market for rubber since, at the time, China was the world’s second largest consumer of rubber (China is now the world’s largest consumer of rubber). Shortly after joining the WTO, China eliminated its import quota on rubber. What impact do you think the import quota reduction likely had on the price of rubber and the quantity of rubber exchanged in China? What implications do you think the elimination of the quota on rubber had on China’s social welfare?The effect of an import quota is to a. lower the price and the quantity of imports. b. raise the price and the quantity of imports. c. raise the price and reduce the quantity of imports. d. raise the quantity and reduce the price of imports.
