Consider a hypothetical example of trade in steel between the United States and China. For simplicity, assume that China is the only source of U.S.steel imports. The following graph shows the U.S. market for steel. Note that in the absence of any trade, the market price for steel in the UnitedStates is $500 per tonne, and the equilibrium quantity is 100 million tonnes per month.Use the green area (triangle symbol) to show U.S. consumer surplus under free trade with China, and use the purple area (diamond symbol) to showU.S. producer surplus under free trade with China.1000Domestic DemandDomestic Supply900Consumer Surplus800700600Producer Surplus500400300Free Trade Price20010020 40 6000100120140160180200QUANTITY OF STEEL (Millions of tonnes per month)Use the previous graph to complete the first row of the following table by indicating the quantity of steel supplied by U.S. producers, demanded byU.S. consumers, and imported from China under free trade.Quantity Supplied by U.S.Quantity Demanded by U.S.ProducersConsumersQuantity Imported from China(Millions of tonnes of steel per(Millions of tonnes of steel per(Millions of tonnes of steel permonth)month)month)Free TradeTrade withTariffPRICE (Dollars per tonne) Suppose American steel manufacturers convince the U.S. government that Chinese firms are selling steel in the U.S. market at well below the cost ofproducing the steel, a practice known as dumping. In response to the accusations, the U.S. government puts a tariff of $100 per tonne on steel fromChina. The tariff increases the price of steel from $200 to sper tonne.Complete the second row of the previous table by indicating the quantity of steel supplied by U.S. producers, demanded by U.S. consumers, andimported from China in the presence of a $100-per-tonne tariff.On the following graph, use the black line (cross symbol) to indicate the domestic price of steel in the presence of a $100-per-tonne tariff. Then usethe green area (triangle symbol) to shade the area that represents consumer surplus under the tariff, and use the purple area (diamond symbol) toshade the area that represents producer surplus under the tariff. Finally, use the grey rectangle (star symbols) to show the revenue that the U.S.government collects as a result of the tariff, and use the tan triangles (dash symbols) to show the deadweight loss (DWL) from the imposition of thetariff.1000Domestic DemandDomestic Supply900Price with Tariff800700600Consumer Surplus500400Producer Surplus300Free Trade Price200Tariff Revenue100204060100120140160180200DWLQUANTITY OF STEEL (Millions of tonnes per month)True or False: According to this model, restricting trade using tariffs harms consumers but helps domestic producers.O TrueO FalsePRICE (Dollars per tonne)

Consumer surplus is the area above market price and below the demand curve. Producer surplus is the…

Answered: Suppose American steel manufacturers…

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

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Complete the second row of the previous table by indicating the quantity of aluminum supplied by U.S. producers, demanded by U.S. consumers, and imported from China in the presence of a $100-per-tonne tariff. On the following graph, use the black line (cross symbol) to indicate the domestic price of aluminum in the presence of a $100-per-tonne tariff. Then usę the green area (triangle symbol) to shade the area that represents consumer surplus under the tariff, and use the purple area (diamond symbol) to shade the area that represents producer surplus under the tariff. Finally, use the grey rectangle (star symbols) to show the revenue that the U.S. government collects as a result of the tariff, and use the tan triangles (dash symbols) to show the deadweight loss (DWL) from the imposition of the tariff. Note: There are two DWL triangles. Plot the right-most DWL triangle first, then plot the left-most DWL triangle after that. Plotting the DWL triangles out of order may cause your answer…
The following graph shows the domestic demand for and supply of oranges in Venezuela. The world price (Pw) of oranges is $545 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 905 Domestic Demand Domestic Supply 865 825 785 745 ☑ 705 665 625 585 545 PRICE (Dollars per ton) 505 0 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of oranges) (?) Because New Zealand participates in international trade in the market for maize, it will import tons of maize. Now suppose the New Zealand government decides to impose a tariff of $120 on each imported ton of maize. Under the tariff, the…
If Guatemala is open to international trade in oranges without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 120 tons of oranges to help domestic producers. A tariff of S will achieve this. A tariff set at this level would raise S tons of oranges. in revenue for the Guatemalan government. per ton
The following graph shows the market for wheat in Canada, where Dc is the demand curve, Sc is the supply curve, and Pw is the free trade price of wheat. Assume that Canada is a relatively small producer of wheat, so changes in its output do not affect the world price of wheat. Also assume that Canada is currently open to free trade, and domestic consumers are able to purchase wheat at the world price with negligible transportation costs. Suppose a subsidy of $80 per ton is granted to exporters in Canada, allowing them to sell their products abroad at prices below their costs. Assume that trade restrictions are also put in place in order to prevent domestic consumers from buying wheat abroad at the world price. Use the grey line (star symbols) to indicate the world price of wheat plus the subsidy on the following graph. Then use the black point (plus symbol) to indicate the price of wheat in Canada and the quantity demanded at that price. Finally, use the tan point (dash symbol) to…
The following graph shows the market for wheat in Canada, where Dc is the demand curve, Sc is the supply curve, and Pw is the free trade price of wheat. Assume that Canada is a relatively small producer of wheat, so changes in its output do not affect the world price of wheat. Also assume that Canada is currently open to free trade, and domestic consumers are able to purchase wheat at the world price with negligible transportation costs. Suppose a subsidy of $80 per ton is granted to exporters in Canada, allowing them to sell their products abroad at prices below their costs. Assume that trade restrictions are also put in place in order to prevent domestic consumers from buying wheat abroad at the world price. Use the grey line (star symbols) to indicate the world price of wheat plus the subsidy on the following graph. Then use the black point (plus symbol) to indicate the price of wheat in Canada and the quantity demanded at that price. Finally, use the tan point (dash symbol) to…
The following graph shows the domestic demand for and supply of oranges in Zambia. The world price (Pw) of oranges is $525 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars perton) 845 805 765 725 685 645 605 565 525 485 445 0 Domestic Demand 10 20 Domestic Supply 30 40 50 60 70 QUANTITY (Tons of oranges) P W 80 90 100 If Zambia is open to international trade in oranges without any restrictions, it will import ? tons of oranges.
Suppose Zambia is open to free trade in the world market for soybeans. Since Zambia is small relative to the international market, the demand for and supply of soybeans in Zambia have no impact on the world price. The following graph shows the domestic market for soybeans in Zambia. The world price of a ton of soybeans is PW = $250. Use the following graph to show the effects of the $ 10 tariff. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff.
The following graph shows the domestic demand for and supply of oranges in Guatemala. The world price (Pw) of oranges is $540 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 990 940 890 840 790 740 690 640 590 540 490 Domestic Demand 50, 540 +➡+ I I 0 50 Domestic Supply PW 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of oranges) A tariff set at this level would raise $ ? If Guatemala is open to international trade in oranges without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 100 tons of…
The following graph shows the domestic demand for and supply of oranges in Guatemala. The world price (Pw) of oranges is $520 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 835 800 765 730 695 660 625 590 555 520 485 Domestic Demand 0 40 Domestic Supply P₁ W 80 120 160 200 240 280 320 360 400 QUANTITY (Tons of oranges) A tariff set at this level would raise $ ? If Guatemala is open to international trade in oranges without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 80 tons of oranges to help…
The following graph shows the domestic demand for and supply of oranges in Guatemala. The world price (Pw) of oranges is $550 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with International trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 820 790 760 730 700 670 640 610 580 550 520 0 Domestic Demand 1 Domestic Supply PW 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of oranges) A tariff set at this level would raise (~.) ? If Guatemala is open to International trade In oranges without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 60 tons of oranges to help…
The following graph shows the domestic demand for and supply of limes in New Zealand. The world price (Pw) of limes is $820 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of limes and that there are no transportation or transaction costs associated with international trade in limes. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 1220 Domestic Demand 1170 1120 1070 1020 970 920 870 820 770 720 0 I | Domestic Supply 50 100 150 200 250 300 350 QUANTITY (Tons of limes) ■ A tariff set at this level would raise $ P W 400 450 500 Activity Frame If New Zealand is open to international trade in limes without any restrictions, it will import Suppose the New Zealand government wants to reduce imports to exactly 200 tons of…
The following graph shows the domestic demand for and supply of lemons in Guatemala. The world price (Pw) of lemons is $260 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of lemons and that there are no transportation or transaction costs associated with international trade in lemons. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 460 Domestic Demand Domestic Supply 435 410 385 360 335 285 260 235 PW 210 0 10 20 30 40 50 60 70 QUANTITY (Tons of lemons) 80 90 100 If Guatemala is open to international trade in lemons without any restrictions, it will import tons of lemons. Suppose the Guatemalan government wants to reduce imports to exactly 20 tons of lemons to help domestic producers. A tariff of $ will achieve…

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