ECO 2302 PRIN MACO W/MYECO ACC >IP<
4th Edition
ISBN: 9781323504161
Author: CASE
Publisher: PEARSON C
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 4.2P
Subpart (a):
To determine
Subpart (b):
To determine
Free trade and effects.
Subpart (c):
To determine
Tariff.
Subpart (d):
To determine
Revenue received from tariff.
Subpart (e):
To determine
Ultimate payer of tariff.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The following graph represents Canada's domestic supply and demand for coffee.Assume that Brazil is the only country producing and selling coffee in the world market.
B) The government opens the market to free trade, and Brazil enters the market, pricingcoffee at $1 per pound.
i. What will happen to the domestic price of coffee?ii. What will be the new domestic quantity supplied and domestic quantity demanded?iii. How much coffee will be imported from Brazil?
Chart 1 below illustrates the tennis shoe market in Canada.
5-1- If Canada did not trade with other countries in this market, then what would be the equilibrium price and quantity in the Canadian tennis shoe market?
The price of tennis shoes in the world market is $ 15.
Suppose Canada opens up to free trade with other countries.
5-2- What would then be the quantity demanded, the quantity supplied, the quantity imported into the Canadian market on the world market?
5-3- Calculate and graphically represent the variation in social surplus brought about by opening up to free trade.
The following graph represents Canada's domestic supply and demand for coffee.Assume that Brazil is the only country producing and selling coffee in the world market.
C) After numerous complaints from domestic coffee producers, the governmentimposes a $0.50 per pound tariff on all imported coffee.
i. What will happen to the domestic price of coffee?ii. What will be the new domestic quantity supplied and domestic quantity demanded?iii. How much coffee will now be imported from Brazil?iv. How much revenue will the government receive from the $0.50 per pound tariff?v. Who ultimately ends up paying the $0.50 per pound tariff? Why?vi. What is the deadweight loss due to the tariff?
Knowledge Booster
Similar questions
- Explain how a subsidy on agricultural goods like sugar adversely affects the income of foreign producers of imported sugar.arrow_forwardIn the country of Alpha, -shirts are sold domestically in a competitive market, the equilibrium price is $10, and the equilibrium quantity is 100. (a) Draw a correctly labeled demand and supply graph for the domestic -shirt market in Alpha. Plot the numbers on the graph. (b) Assume the world price of -shirts is $6, and Alpha engages in international trade.(i) Will Alpha be an exporter or importer of -shirts? Explain.(ii) On your graph in part (a), indicate the domestic quantity demanded of -shirts at the world price and label it . (iii) On your graph in part (a), indicate the change in the consumer surplus, shaded completely. (c) Suppose the government of Alpha imposes a tariff of $2 on -shirts. On your graph in part (a), indicate the new domestic quantity supplied of -shirts as a result of the tariff and label it .arrow_forwardThe following graph shows the domestic market for oil in the United States, where SDSD is the domestic supply curve, and DDDD is the domestic demand curve. Assume the United States is considered a large nation, meaning that changes in the quantity of its imports due to a tariff influence the world price of oil. Under free trade, the United States faced a total supply schedule of SD+WSD+W, which shows the quantity of oil that both domestic and foreign producers together offer domestic consumers. In this case, the free-trade equilibrium (black plus) occurs at a price of $240 per barrel of oil and a quantity of 9 million barrels. At this price, the United States imports 6 million barrels of oil. Suppose the U.S. government imposes a $60-per-barrel tariff on oil imports.arrow_forward
- 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:…arrow_forwardA small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade): $20 per bottle Domestic production (free trade): 500,000 bottles Domestic production (after tariff): 600,000 bottles Domestic consumption (free trade): 750,000 bottles Domestic consumption (after tariff): 650,000 bottles Draw a demand and supply curve for the country’s wine market to show the effects of the tariff. Find the change in consumer surplus, producer surplus, and government revenue resulting from the tariff.arrow_forward[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.] [Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences. How to draw the graph?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Principles of Macroeconomics (MindTap Course List)EconomicsISBN:9781285165912Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
- Principles of Macroeconomics (MindTap Course List)EconomicsISBN:9781305971509Author:N. Gregory MankiwPublisher:Cengage LearningEssentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning