LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 4, Problem 3RQ
To determine
The effect of migration of workers on
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Show what happens to producer surplus, worker surplus, and the gains from trade as workers migrate from a low-wage to a high-wage region.
Choose a country and analyse one of the following actions 1. Ceiling price 2. Floor price 3. Subsidy 4. Rent control 5. Minimum wage 6. Quota
Draw a supply and demand diagram for the purpose of demonstrating the welfare effects of a quota in a small country. Describe prices and trade before and after the imposition of the quota. Using areas on the diagram, calculate the total gains and/or losses from the imposition of a quota. Explain the impact on the various economic actors that are affected by the quota..
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- Discuss the gains and losses from trade in terms of consumer and producer surplus.arrow_forwardThe figure illustrates the supply and demand at home. Line “A” represents the initial Home demand with free trade. Suppose a quota of 200 units is now imposed.arrow_forwardIn the past, Canada has agreed to set an upper limit on the total amount of softwood lumber exported to the United States. This is an example of a(n): Group of answer choices export subsidy voluntary export restriction import quota protective tariffarrow_forward
- The analysis of a quota implies that .... please select one or more : a) The effect of a quota on trade is the same as a tariff. b) A quota will cause the same deadweight losses as a tariff. c) States should prefer quota instead of tariff. d) A quota increases imports if it is associated with high price elasticity of demand. e) When a quota is applied, the consumer surplus decreases but the producer surplus does not increase because only the state benefits from the quota.arrow_forwardExplain why consumer and producer surplus can be used to gauge the change in welfare caused by the export subsidy on individuals and firms.arrow_forwardA trade restriction on the quantity of a good that an exporting country is allowed to export to another country is known as? a. Voluntary export restraint b. Export subsidy c. Quota d. Sanctionarrow_forward
- Please Fill in the blank for the following: is the manufacturing and/or sale of goods and/or services to satisfy the wants and needs of consumers to make a profit. ___ The domestic ________________________ is comprised of customers who live in the country where the business operates. Industries characterized by providing services to consumers and other businesses are known as ______________industries. A factory owned by a company based in another country is called a _________________ plant. The reliance of two or more nations on each other for products or services is referred to as ________________________ A(n) ________________________ market is comprised of customers who live in a different country than the one where the business operates. The type of business that creates, ships, and sells goods and services between producers, companies, and consumers located in different countries is an __________________ business.arrow_forwardComment on the following statement: “International trade leads to complete equalization of factor prices.”arrow_forwardThe country imposes a 50% tariff. Complete the following: Price Quantity Demanded Domestically Quantity Supplied Domestically Import/Export Quantity Imported/Exported Tariff Revenue State whether each group would benefit, lose or have no effect as a result of the tariff imposed in the previous question. Explain your answers. Domestic sellers Consumers Foreign sellers Government Workers in the importing industry.arrow_forward
- Markets are said to generate a benefit to society in the form of "gains from trade." These gains from trade can be calculated in the form of ___ A. the total surplus.B. the bargaining agreement.C. the producer surplus.D. the consumer surplus.arrow_forwardExport 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_forwardThe biggest regional trade agreement in history is ____. (fill in the blank)arrow_forward
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