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 4.4P
To determine
Identify the effects of changes in the imports and exports on two economies.
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In 2017, Ecuador's biggest export was crude (unprocessed) petroleum, 63% of which it exported to the United States, and
Ecuador's biggest import was refined (processed) petroleum, of which 70% was imported from the United States. What does
this tell you about the countries' comparative advantages in extracting petroleum and refining petroleum?
This information suggests that
has a comparative advantage in refining petroleum, and
the United States
must I
ntage in extracting petroleum.
Ecuador
Q5(5): Kutaro is a small island nation in the South Pacific. The inhabitants of Kutaro work to
produce one of two goods: honey and clams. Recently Kutaro has begun to trade with other
countries, and the Kutaran economy has adjusted to the international prices for honey and clams
and is in equilibrium. The current international price for honey is $2 per jar, and the international
price for clams is $16 per pound.
a) If the Kutarans decide to give up producing 100 pounds of clams, how many more jars of
honey could they produce?
b) Now suppose that the Kutarans want to increase production of clams by 50 pounds. How
many jars of honey must they give up to make this possible?
In March 2002, then-President George W. Bush put a tariff on imported steel as a means of protecting the domestic steel industry. In February, before the tariff went into effect, the United States produced 7.4 million metric tons of crude steel and imported about 2.8 million metric tons of steel products at an average price of $363 per metric ton. Two months later, after the tariff was in effect, U.S. production increased to 7.9 million metric tons. The volume of imported steel fell to about 1.7 million metric tons, but the price of the imported steel rose to about $448 per metric ton. The supply and demand diagram below shows this situation (along with an estimated no-trade domestic equilibrium at a price of $625 per metric ton and a quantity of 8.9 million metric tons).
Using the letters, determine which areas on the graph represent each of the following:a. The increase in producer surplus gained by U.S. steel producers as a result of the tariffb. The loss in consumer surplus…
Chapter 20 Solutions
Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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