Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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 4.3P
To determine

Identify the differences in the effects of quota and tariff.

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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)
The cost of producing cars in Canada is $30,000, while the cost of producing cars in Mexico is $22,000, while in the U.S. it costs $18,000. Canada currently imposes a 50% tariff on all automobile imports. a) If Canada enters into a customs union with Mexico, will this lead to trade diversion or trade creation? b) If the tariff rate was originally 100%, would Canada entering into a customs union with Mexico lead to trade diversion or trade creation? c) If the tariff rate was originally 100%, and the cost of producing cars in the U.S. was $12,000, would Canada entering into a customs union with Mexico lead to trade diversion or trade creation?
The demand for cameras in a certain country is given by D = 8000 - 30P, where P is the price of a camera. Supply by domestic camera producers is S 4000 + 10P. Suppose that world price of a camera is $150. If this country decides to trade, which of the following is true? 3000 cameras will be exported Domestic production of cameras will decrease by 500 Domestic production of cameras will increase by 500 2000 cameras will be imported

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Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)

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