Suppose Japan agreed to a voluntary export restriction (VER) that reduced U.S. imports of Japanese steel by 10 percent. What would be the likely short-run effects of that VER on the U.S. and Japanese steel industries? If this restriction were permanent, what would be its long-run effects in the two nations on (a) the allocation of resources, (b) the volume of employment, (c ) the price level, and (d ) the standard of living?
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A: QD = 361 - 2P QS = 23 + P World price = 70 Quota = 80
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Suppose Japan agreed to a voluntary export restriction (VER) that reduced U.S. imports of Japanese steel by 10 percent. What would be the likely short-run effects of that VER on the U.S. and Japanese steel industries? If this restriction were permanent, what would be its long-run effects in the two nations on (a) the allocation of resources, (b) the volume of employment, (c ) the
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- The policies of OPEC+ have nothing to do with the surge in crude prices, two sources in the group said on Monday, downplaying the likelihood of any boost to global supply from the alliance that includes Russia and Saudi Arabia. Oil spiked to its highest price since 2008 on Monday amid fears about supply shortages as the United States and European allies considered banning Russian oil, while the prospects of a swift return of Iranian crude to markets receded. At its last meeting on March 2, the Organization of the Petroleum Exporting Countries (OPEC), Russia and allied producers stuck to a plan for a modest output rise in April and ignored the Ukraine crisis in their talks. "The problem is the current market conditions have nothing to do with OPEC policy/policies. It has nothing to do with supply (production) shortfall," one of the sources said. "We all know the reasons for the current price. OPEC or OPEC+ has nothing to do with all the reasons that are driving prices to…Domestic producers of microprocessors send a lobbyist to the U.S. government to request that the government impose trade restrictions on imports of microprocessors. The lobbyist claims that the U.S. microprocessor industry is new and cannot currently compete with foreign firms. However, if trade restrictions were temporarily imposed on microprocessors, the domestic microprocessor industry could mature and adjust and would eventually be able to compete in the world market. Which of the following justifications is the lobbyist using to support their argument in favor of the trade restriction on microprocessors? National-security argument Infant-industry argument Unfair-competition argument Jobs argument Using-protection-as-a-bargaining-chip argumentOn May 13, 2022, the Government of India announced a ban on wheat export, citing s food security and soaring (food) prices. i) Explain how a ban on wheat export may help to stabilize food price in India. ii) Russia, Europe, the United States and Canada are traditionally the top global wheat exporters. However, each has faced significant wheat crop setbacks in recent seasons, mainly due to mainly due to droughts in North America and Europe. Given what have happened in the traditional world wheat exporters and the recent export ban from India. What happens to the world market for wheat? iii) Continued from the previous parts, discuss the impacts on the Canada’s terms of trade and the (domestic) market for wheat.
- If firms are in a competitive market, firms use marginal cost=price as a price-setting rule. Why multinational firms do not follow the price-setting rule like the firms in the competitive market (or why exporting firms do not follow the price-setting rule)? Your answer should be based on the characteristic market and the internal economies of scale. What is the price-setting rule for multinational firms?Consider an international economy consisting of USA and China. There are two factors: capital (K) and labor (L) and two goods: manufacture(M) and food (F): The two countries share the same constant returns to scale production functions. Representative consumers of the two countries share the same homothetic welfare functions with usual properties. At autarky (before trade) and after trade opens, both countries produce both goods. All the prices are in terms of units of food. Thus, the price of food is 1: The USA is capital abundant: Here, L and K are USA endowments of labor and capital and Land Kare Chinese endowments of labor and capital. Assume that food industry is capital intensive and manufacturing is labor intensive. All markets are competitive. (a) Define the following terms: manufacture industry is labor intensive. (b) Draw how the relative supply curves of USA and China might look like and explain their relative positions using the Rybczynski theorem. Use PM/PFon the…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 economy of a small island nation is based on two sectors, agriculture and tourism. Production of a dollar's worth of agriculture requires an input of $0.36 from agriculture and $0.50 from tourism. Production of a dollar's worth of tourism requires an input of $0.46 from agriculture and $0.25 from tourism. Find the output from each sector that is needed to satisfy a final demand of $41 million for agriculture and $79 million for tourism.Consider a two-sector general equilibrium of production system. Sector one’s unit cost function is c1 = w1/3r2/3 and that of sector two is c2 = w1/2r1/2, where w and r are the wage rate of labor and the rental rate of capital, respectively. Both the input and output markets are all characterized by perfect competition and full employment of both the factors of production. For a one-percent increase in the price of the commodity produced in sector two, what are the percentage changes in factor prices?Companies in the steel and alumina industry may react to an increase in the price of crude oil by increasing their prices to reflect the increased cost of production. This, in turn, may lead to higher prices for consumers. Alternatively, companies may seek to reduce their production costs by implementing cost-saving measures, such as switching to alternative sources of energy or reducing their energy consumption. In some cases, companies may seek government intervention, such as relaxing import controls or offering subsidies, to help them cope with the increased cost of production. Ultimately, the reaction of companies in the steel and alumina industry will depend on a range of factors, including the specific circumstances of each company, the availability of alternative sources of energy, and the actions of their competitors. An increase in the price of crude oil will increase the cost of production for the steel and alumina industry, which will increase the price of their products…
- Alice is the global marketing director for a multinational electronics manufacturing firm. She is assigned with the task of expanding the firm to large and growing international markets. Which of the following factors of international trade will benefit Alice's company a) International trade will provide the company with a comparative advantage. b) The company will benefit from the inflow of new, innovative ideas. C The company will benefit from a balance of trade. ) d) International trade will provide the company with an absolute advantage.The Energy Information Administration's forecast that world crude oil demand will likely outpace supply by 20 million barrels this year has also increased market uncertainty and driven up prices. Companies in the US steel and alumina industries have been urging the loosening of import restrictions because they fear running short of petrol. Despite the potential market effects, analysts believe that most steel and alumina companies won't be significantly impacted because crude oil only accounts for a small fraction of their overall costs. In general, rising crude oil prices are the result of a mix of supply and demand issues, market uncertainty, and other reasons. The price of this significant commodity will undoubtedly continue to be significantly influenced by global supply and demand dynamics, even though the precise trajectory of prices in the future is difficult to forecast. 1) Draw a graph to show this information.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 If the world price is 70, then is Malaysia an importer or exporter? 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 import quota? (Please give your answers in two decimal places, Multiply by 100 to…