Exploring Macroeconomics
7th Edition
ISBN: 9781285859446
Author: Sexton, Robert L.
Publisher: Cengage Learning
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Chapter 20, Problem 14P
To determine
To explain:
The reasons for which traditional measure of
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Use the following graph, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product to answer the next question.
Price
a
Pe
0
E
V
F
K
G H
X
Quantity
у Z
Sd + Q is the product supply curve after an import quota is imposed. A quota of y-w
will result in quota rent equal to areas
OA) F + G + H+ J.
C) G + H.
OD) F + J.
$.+Q
B) E+F+G+H+ J.
How would direct subsidies to key industries be preferable to tariffs or quotas?
QD = 100 – 2p
QS = 2p – 20
Find the domestic market equilibrium.
Graph the impact of opening to international trade with a world price of 48, clearly labelling the new consumer surplus and producer surplus.
Find the exact numerical amounts of consumer surplus, producer surplus, government revenue, and total welfare, for the case of autarky and the case of international trade.
What would happen if the government imposed a tariff of 20/unit in this market? Explain.
Chapter 20 Solutions
Exploring Macroeconomics
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- Economics Questionarrow_forwardConsider 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. ecause this country exports steel, the world price is represented by . 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 , the quantity of steel produced by domestic producers , and the quantity of steel exported . True or False: With the export subsidy, domestic producers will sell steel to domestic consumers and sell the rest abroad. True False Under the export subsidy, consumer surplus is and producer surplus is . Government revenue by (increases or Decreases) . As a…arrow_forwardPlease help me solve this problem. Thanks!arrow_forward
- The following graph shows the domestic supply of and demand for soybeans in Honduras. The world price (Pw) of soybeans is $530 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 890 Domestic Demand Domestic Supply 850 810 770 730 690 650 610 570 Pw 530 490 50 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of soybeans) PRICE (Dollars per ton)arrow_forwardDescribe the structure of the tariff in the industrial countries?arrow_forwardSolve this economic Explain how tariff revenue can be considered an element of the importing country's nationalgain or loss from imposing a tariff.arrow_forward
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