Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 20, Problem 3.3P
To determine
Identify the role of countries as exports and imports for many products.
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At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is the relationship between exports and imports?
Do you think a country should have more imports or exports, and explain your reasoning
The graph above is the U.S. market for some imported good. Supply is a flat curve. The U.S. can import the Chinese good for $40 and the Mexican good for $48. Assume the U.S. imposes $10 tariffs on each unit of the imported good. What will be the quantity imported? From which country? How your answer will change if the U.S. keep the $10 tariffs but join a trade bloc with Mexico? Will the country’s wellbeing increase or decrease? By how much (hint find the change in consumer surplus and the change in government revenue)? Explain your answers.
Chapter 20 Solutions
Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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- From the Work It Out Effects of Trade Barriers, you can see that a tariff raises the price of imports. What is interesting is that the price rises by less than the amount of the tariff. Who pays the rest of the tariff amount? Can you show this graphically?arrow_forward“Imports destroy jobs; exports create them. The average American is hurt by imports and helped by exports.” Do you agree or disagree with this statement? Explain.arrow_forwardDraw a graph (graph is for your own reference, not required to be attached in the answer sheet) to illustrate the U.S. supply and demand market for semiconductors. What is the price with free international trade? What is the quantity of semiconductors produced in U.S. and total quantity bought by U.S. people and the quantity exported from other countries?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_forwardwhat factors have helped the united states to become the world's leading exporter of movies, books and popular music?arrow_forwardEconomic  Use the graph below and the following information to answer the next question. The world price of soybeans is five dollars per bushel and the importing country is small enough to not affect the real price. Suppose the government puts a tariff of one dollars per bushel on soybean imports how much revenue will the government raise from a one dollar per bushel tariff on soybean imports.arrow_forward
- Export Subsidy. Suppose the home country exports cloth and imports food. Show the impact of an export subsidy by the home country using the relative demand and relative supply curves for cloth. What is the impact on the home country's terms of trade? Make sure you label your graph and explain your reasoning.arrow_forward23. What happens to the relative price of a good as a result of trade if there is an increasing return to scale in the industry producing the good. Is it still converging to a price between domestic and foreign price of the good? Draw a graph to answer.arrow_forwardUse the graph below to answer the following question: What is the total amount of shoes the US will export with free trade? Provide your answer below: Price (dollars) 50 25 15 United States Exports Supply Price with free trade Price with partial protection Price without trade 200 350 500 600 750 Quantity (shoes) Demandarrow_forward
- What are tariffs? Why do governments impose tariffs on imported goods?arrow_forwardAccording to the foreign trade effect, when the price of American-made cars falls, U.S. consumers are likely to buy: More American-made cars. More foreign-made cars. Fewer total cars. More foreign-made carsarrow_forwardIf the government of Mexico introduces a $2,000 tariff on car imports, what will be the price of a car in Mexico, the quantity of cars produced in Mexico, the quantity imported into Mexico, and the government’s tariff revenue?arrow_forward
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