The market for pencils has a domestic demand equation P=20−0.5Q�=20−0.5�, and a domestic supply equation P=5+Q�=5+�, where quantity is measured in thousands. The world supply equation for pencils is PW=10��=10. The domestic government decides to implement a tariff of $10 per thousand pencils. As a result of the tariff, the new domestic price of pencils is

The market for pencils has a domestic demand equation P=20−0.5Q�=20−0.5�, and a domestic supply equation P=5+Q�=5+�, where quantity is measured in thousands. The world supply equation for pencils is PW=10��=10. The domestic government decides to implement a tariff of $10 per thousand pencils. As a result of the tariff, the new domestic price of pencils is

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter35: International Trade Restrictions

Section: Chapter Questions

Problem 3E

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The market for pencils has a domestic demand equation P=20−0.5Q�=20−0.5�, and a domestic supply equation P=5+Q�=5+�, where quantity is measured in thousands. The world supply equation for pencils is PW=10��=10. If trade is allowed, what is the resulting equilibrium price and quantity?
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Steel Industry Consider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply for steel in this country. One of the two price lines represents the world price of steel. Use the following graph to help you answer the questions below. You will not be graded on any changes made to this graph. 1. Because this country exports steel, the world price is represented by P1 or P2. Suppose that a “pro-trade” government decides to subsidize the export of steel by paying $10 for each ton sold abroad. 2. With this export subsidy, the price paid by domestic consumers is $???? per ton, and the price received by domestic producers is $???? per ton. 3. The quantity of steel consumed by domestic consumers INCREASES or REMAINS UNCHANGED or DECREASES, the quantity of steel produced by domestic producers INCREASES or REMAINS UNCHANGED or DECREASES, and the quantity of steel exported INCREASES or REMAINS UNCHANGED or DECREASES. 4. TRUE or FALSE:…