Use the following graph to show the effects of the $200 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 surpluswith the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (squaresymbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areasrepresenting deadweight loss (DWL) caused by the tariff.PRICE (Dollars per ton)1200 Domestic Demand11001000900800700800500400300+20040Domestic SupplyQUANTITY (Tons of wheat)Consumer SurplusProducer SurplusGovernment Revenue1400160PW200World Price Plus TariffGovernment RevenueComplete the following table to summarize your results from the previous two graphs.With Free Trade(Dollars)With a Tariff(Dollars)DWLBased on your analysis, as a result of the tariff, Guatemala's consumer surplusby, and the government collectsproducer surplusin revenue. Therefore, the net welfare effect is aof Suppose Guatemala is open to free trade in the world market for wheat. Since Guatemala is small relative to the international market, the demand forand supply of wheat in Guatemala have no impact on the world price. The following graph shows the domestic market for wheat in Guatemala. Theworld price of a ton of wheat is Pw = $400.On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at thefree-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS).(?)PRICE (Dollars per ton)120011001000+900800700600500400300-2000Domestic Demand20 40Domestic Supply6080 100 120 140QUANTITY (Tons of wheat)PW160 180 200ACSTPSBecause Guatemala participates in international trade in the market for wheat, it will importtons of wheat.Now suppose the Guatemalan government decides to impose a tariff of $200 on each imported ton of wheat. Under the tariff, the price Guatemalanconsumers pay for a ton of wheat becomes Sand Guatemala will importtons of wheat.

Answered: Image /qna-images/answer/c6af4317-0243-4918-b3dc-578b829ed44e.jpg

Suppose Guatemala is open to free trade in the world market for wheat. Since Guatemala is small relative to the international market, the demand for and supply of wheat in Guatemala have no impact on the world price. The following graph shows the domestic market for wheat in Guatemala. The world price of a ton of wheat is Pw = $400. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 1200 1100 1000 900 800 700 600 500 400 300 200 Domestic Demand 0 20 40 Domestic Supply 60 80 100 120 140 160 180 200 QUANTITY (Tons of wheat) CS PS Because Guatemala participates in international trade in the market for wheat, it will import tons of wheat. Now suppose the Guatemalan government decides to impose a tariff of $200 on each imported ton of wheat. Under the tariff, the price Guatemalan consumers pay for a ton of wheat becomes S , and Guatemala will import tons of wheat.

Suppose Guatemala is open to free trade in the world market for wheat. Since Guatemala is small relative to the international market, the demand for and supply of wheat in Guatemala have no impact on the world price. The following graph shows the domestic market for wheat in Guatemala. The world price of a ton of wheat is Pw = $400. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 1200 1100 1000 900 800 700 600 500 400 300 200 Domestic Demand 0 20 40 Domestic Supply 60 80 100 120 140 160 180 200 QUANTITY (Tons of wheat) CS PS Because Guatemala participates in international trade in the market for wheat, it will import tons of wheat. Now suppose the Guatemalan government decides to impose a tariff of $200 on each imported ton of wheat. Under the tariff, the price Guatemalan consumers pay for a ton of wheat becomes S , and Guatemala will import tons of wheat.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

See similar textbooks

Similar questions

bottom half When Venezuela allows free trade of soybeans, the price of a ton of soybeans in Venezuela will be $350. At this price, tons of soybeans will be demanded in Venezuela, and tons will be supplied by domestic suppliers. Therefore, Venezuela will export tons of soybeans. Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade. Without Free Trade With Free Trade (Dollars) (Dollars) Consumer Surplus Producer Surplus When Venezuela allows free trade, the country's consumer surplus decrease or increase by , and producer surplus decrease or increase by . So, the net effect of international trade on Venezuela's total surplus is a loss or gain of .
Suppose the market price for solar panels in the U.S. will be $500 per panel in the absence of any trade in solar panels. The price of solar panels in the world market is $295 per panel. What will be the price of solar panels in the U.S. if the U.S. has free trade in solar panels? Diagrammatically show the gains from trade in solar panels. (Change in welfare as a result of free trade in solar panels compared to the situation of no trade. Show how the different components of welfare such as consumer surplus and producer surplus change.) Now suppose the Trump administration imposes a quota. That is, it says that it will allow the import of only 10 million panels a year (With free trade the imports would have been more than 10 million). Will the price of solar panels rise or fall in the US? Who will gain from the quota? Who will lose? Diagrammatically show the welfare impact of the quota compared to the free trade (Again show the change in welfare in terms of consumer surplus, producer…
Tarriffs: Suppose the market price for solar panels in the U.S. will be $500 per panel in the absence of any trade in solar panels. The price of solar panels in the world market is $295 per panel. a) What will be the price of solar panels in the U.S. if the U.S. has free trade in solar panels? Diagrammatically show the gains from trade in solar panels. (Change in welfare as a result of free trade in solar panels compared to the situation of no trade. Show how the different components of welfare such as consumer surplus and producer surplus change.) b) Now suppose the Trump administration imposes a quota. That is, it says that it will allow the import of only 10 million panels a year (With free trade the imports would have been more than 10 million). Will the price of solar panels rise or fall in the US? Who will gain from the quota? Who will lose? Diagrammatically show the welfare impact of the quota compared to the free trade situation. (Again show the change in welfare in…
3. Welfare effects of a tariff in a small country Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is PWPW = $250 per tonne. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). If Kenya allows international trade in the market for wheat, it will import tonnes of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported tonne of wheat. After the tariff, the price Kenyan consumers pay for a tonne of wheat is , and Kenya will import tonnes of wheat. Show the effects of the…
3. Consumer surplus and producer surplus from market exchange Consider the Bolivian market for lemons. The following graph shows the domestic demand and domestic supply curves for lemons in Bolivia. Suppose Bolivia's government currently does not allow the international trade in lemons. Use the black point (plus symbol) to indicate the equilibrium price of a ton of lemons and the equilibrium quantity of lemons in Bolivia in the absence of international trade. Then, use the green point (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple point (diamond symbol) to shade the area representing producer surplus in equilibrium. Note: Select and drag a fill area point from the palette to the graph. To fill in regions on the graph, merely drop the fill area point on the desired region. Based on the previous graph, total surplus in the absence of international trade is $____ million.
Consider the Colombian market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Colombia. Suppose Colombia's government currently does not allow international trade in soybeans. Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity of soybeans in Colombia in the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium. Based on the previous graph, total surplus in the absence of international trade is . The following graph shows the same domestic demand and supply curves for soybeans in Colombia. Suppose that the Colombian government changes its international trade policy to allow free trade in soybeans. The horizontal black line (PWPW) represents the world…
Suppose Gus has a pineapple that he would get $3 in enjoyment from consuming and suppose Sean has no pineapple and would get $7 in enjoyment from consuming a pineapple. If they moved the pineapple from Gus to Sean what would be the gains from the trade (or surplus) created?
Because Zambia participates in international trade in the market for soybeans, it will import tons of soybeans. Now suppose the Zambian government decides to impose a tariff of $10 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes , and Zambia will import tons of soybeans. Use the following graph to show the effects of the $10 tariff
Assume that under free trade the U.S. can import good x from France for $50 and domestic consumption and production are 14 million and 6 million respectively. This is the free trade price at which the U.S. consumes good x. a) Summarize the above information in a graph and label it carefully. b) Now assume that the U.S. places a tariff of $5 + 15% of the free trade price of good x. Describe the type of tariff imposed and calculate the tariff per unit of good x. c) Assume the tariff above changes domestic consumption to 12 million and production to 8 million. Show this on a graph. [Please draw a new graph for this question and label it carefully.]. Calculate and explain who gains and who loses and the net effect on domestic welfare due to the tariff compared with free trade. d) Now assume that instead of a tariff, the U.S. imposed a quota on good x with similar results on price and quantity. This means that the quota is the same amount as imports under a tariff and the new price due to…
The graph below shows the market for apricots in the United States, a nation that is open to international trade but is assumed to be a price taker unable to affect the world price of apricots. a. In the graph below, identify the areas that represent consumer surplus (CS) and producer surplus (PS) with international trade. Instructions: Use the tools provided "CS" and "PS" to illustrate these areas on the graph. (SEE GRAPH 1) Now suppose that domestic apricot growers in the United States convince the government to impose a tariff (tax) on imported apricots to raise the price in the United States to $700 per ton. b. Using the graph below, indicate the new price with the tariff imposed and identify the areas that represent the new consumer surplus (CS), new producer surplus (PS), and the tariff revenue with this new tariff in place. Instructions: Use the tool provided "Pw + tariff" to draw the new price after the tariff has been imposed. Then use the tools provided "Qs +…
Suppose the following figure shows the domestic market for hockey sticks in a certain country. Thegovernment has recently imposed tariffs on hockey sticks. While the world price of a hockey stick is$60, the price in this country (with the tariff) is $75. a. How did the quantity of imports change when the government imposed a tariff?b. How much does the government earn from the tariff?c. How does the value of consumer surplus change after the tariff is introduced?d. How does the value of producer surplus change after the tariff is introduced?e. What is the value of the deadweight loss from the tariff?f. What is the value of social surplus after the tariff? How will social surplus change if the tariff iseliminated and the price of hockey sticks falls to the world price?
Market for Clothing in CambodiaConsumer SurplusProducer SurplusPrice of ClothingQuantity of ClothingDomestic DemandDomestic SupplyNew World Price Suppose the following graph represents the market of clothing in Australia prior to the expansion of China's clothing industry. Australia is an of clothing because the world price is the domestic equilibrium price.