Answered: When a small country imposes a tariff…

When a small country imposes a tariff on an imported good, domestic consumers bear of the statutory burden and of the economic burden of the tariff. 100%; 0% 50%; 50% 100%; 100% 0%; 100%

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter33: International Trade

Section: Chapter Questions

Problem 6QP

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Assume a perfectly competitive market and the exporting country is small. Using a demand and supply diagram, show the impact of increasing standards on a low-income exporter of toys. Show the tariffs impact. Is the effect on toy prices the same or different? Why is a standards policy preferred to tariffs?
How many units will the domestic firms produce without trade? How many units will the domestic firms produce without a tariff if the foreign producer can sell the product at a $4 price? How many units will the foreign firms produce / sell if a government tariff of $2.00 is imposed on foreign goods? What will be the total government revenues if a tariff of $2.00 is imposed on foreign goods? What will be the total deadweight losses if a tariff of $2.00 is imposed on foreign goods?
Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. A) Consider the use of import tariff vs. import quota in Home country that will result in the same amount of good Y imports and the domestic price of good Y. If quota rents are given to Foreign country, which policy, i.e., import tariff vs. import quota, is preferable by Home country on the basis of its effect on social welfare? Explain your reasoning.
Now, suppose that Island is a large exporting country with the following demand and supply functions and the free-trade world price is $5,000 per unit. D = 900,000 − 150P and S = 100,000 + 50P The Island government offers an export subsidy that increases the domestic market price to $5,500 and lowers the world price to $4,500. However, starting next month, the Island government will be removing the export subsidy in compliance with the latest international trade pact. A. What is the impact of the removal of the subsidy on domestic consumers? B. What is the change in producer surplus due to the movement to free trade? C. What is the net effect of moving to free trade on Island welfare?
Suppose the world price of clothing is $50 per unit. Domestic demand and domestic supply aredetermined by the following equations:Domestic Demand: p = 200 − 2qDomestic Supply: p = 20 + 3qwhere p and q represent price and quantity, respectively. Domestic government levies an ad valorem tariff rate of 100% 11. Under the 100% tariff protection, domestic economy’s national welfare is worth _____ or so.A) $1,250B) $2,850C) $3,025D) $4,73312. Under free trade, domestic economy’s national welfare is worth _________or so.A) $5,250B) $5,775C) $6,125D) $6,57513. Suppose that domestic economy moves from the initial free trade regime to the 100% tariffregime. Then the deadweight loss resulting from production inefficiency can be calculated at_________ or soA) $416.75B) $455.25C) $525.15D) none of the above
Assume the United States is a large consumer of steel, able to influence the world price. Its demand and supply schedules are respectively denoted by Dus and Sus in Figure 42. The overall (United States plus world) supply schedule of steel is denoted by Sus.. Figure 4.2. Import Tariff Levied by a Large Country 8 550 475 450 325 0 5 10 O $450, 5 tons, 60 tons, 55 tons O $475, 10 tons, 50 tons, 40 tons O $525, 5 tons, 60 tons, 55 tons 20 O $630, 30 tons, 30 tons, 0 tons 30 40 Consider Figure 4.2. With free trade, the United States achieves market equilibrium at a price of Sus 50 55 Sus W.1 Sus+ w Dus Tons of Steel At this price, of steel are produced by U.S. firms, are bought by U.S. buyers, and are imported.
Suppose that a “pro-trade” government decides to subsidize the export of steel by paying $10 for each ton sold abroad. With this export subsidy, the price paid by domestic consumers is$____per ton, and the price received by domestic producers is$____per ton. The quantity of steel consumed by domestic consumers (DECREASE, REMAINS UNCHANGED, INCREASE) , the quantity of steel produced by domestic producers (DECREASE, REMAINS UNCHANGED, INCREASE) , and the quantity of steel exported . (DECREASE, REMAINS UNCHANGED, INCREASE) , Under the export subsidy, consumer surplus is$________and producer surplus is$________. Government revenue (DECREASE OR INCREASE) by$____. As a result, total surplus (DECREASE , REMAINS UNCHANGED OR INCREASED) True or False: With the export subsidy, domestic producers will not sell any steel to domestic consumers.
Please no written by hand solutions Question 1: State whether each of the following statements is true or false. Justify for all statements and illustrate graphically/numerically whenever necessary. 1. The steeper the supply and demand curves for a certain commodity, the lower the trade and revenue effects of a tariff imposed on imports of such commodity. 2. With a positive nominal tariff on the final commodity, more of the commodity is produced domestically than would be under free trade. 3. If imported inputs constitute half the value of the final commodity and are admitted duty free, then the rate of effective protection is equal to the nominal tariff rate on the final commodity. 4. Export subsidies can be regarded as a form of dumping.
Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. Free Trade Price: $70 30 Units of Good Y are traded under free trade If a tariff of $15 is imposed by the home country on each unit of good Y imported, Foreign exporters receive a price of $60. If a tariff of $15 is imposed by the home country on each unit of Good Y imported, Home consumers pay $75 If a tariff of $15 is imposed by the home country the number of goods traded is 20. a) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. b) Assume that instead of a specific tariff, an import quota will be used on good Y. What is the amount of the quota that will have identical effects (in terms of amount of good Y imports and the…
Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. Free Trade Price: $70 30 Units of Good Y are traded under free trade If a tariff of $15 is imposed by the home country on each unit of good Y imported, foreign exporters receive a price of $85. a) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the price of good Y that Home consumers pay? Show your work. b) If home country imposes a specific tariff of $15 per unit of good Y imported, how many units of good Y are traded now? Show your work. c) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. d) Assume that instead of a specific tariff, an import quota will be used on good Y. What is the…
Consider a small country that exports steel. Supposethat a “pro-trade” government decides to subsidizethe export of steel by paying a certain amount foreach ton sold abroad. How does this export subsidyaffect the domestic price of steel, the quantity ofsteel produced, the quantity of steel consumed, andthe quantity of steel exported? How does it affectconsumer surplus, producer surplus, governmentrevenue, and total surplus? Is it a good policy fromthe standpoint of economic efficiency? (Hint: Theanalysis of an export subsidy is similar to the analysisof a tariff.)
Consider a world with two countries - USA and Foreign and a competitive market of sugar in both countries. Foreign is more effecient in the production of sugar and in a free trade equilibrium, US would import part of its consumption of sugar. Describe graphically such trading equilibrium of sugar. What would be the effect on the sugar price in USA and on the welfare (measured by consumer surplus, pro- ducer surplus and tari§ revenue) of US when US imposes an import tariffs on sugar? Argue using a graph taking into consideration that US is a large sugar importing country.