Microeconomics Plus Mylab Economics With Pearson Etext -- Access Card Package (2nd Edition) (the Pearson Series In Finance)
2nd Edition
ISBN: 9780134641454
Author: Acemoglu
Publisher: PEARSON
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Chapter 8, Problem 9P
To determine
Impact of increase in
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New Zealand in one year can raise 75 tons of beef or produce 750 boxes of tulips. In the same growing season, Venezuela can raise 45 tons of beef or produce 650 boxes of tulips. When the two countries begin trading beef for tulips, we expect the total surplus from beef consumption and production to:
A)
fall in New Zealand
B)
rise in New Zealand
C)
stay the same in Venezuela.
D)
either rise or fall in Venezuela.
bottom half
When Venezuela allows free trade of soybeans, the price of a ton of soybeans in Venezuela will be $350. At this price,
tons of soybeans will be demanded in Venezuela, and
tons will be supplied by domestic suppliers. Therefore, Venezuela will export
tons of soybeans.
Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade.
Without Free Trade
With Free Trade
(Dollars)
(Dollars)
Consumer Surplus
Producer Surplus
When Venezuela allows free trade, the country's consumer surplus
decrease or increase by
, and producer surplus decrease or increase by
. So, the net effect of international trade on Venezuela's total surplus is a loss or gain of
.
The graph below represents the market for sugar in the U.S. The domestic supply and demand curves are drawn, the world price for sugar is indicated, and the effect of a tariff the US is imposing on sugar imports is shown. Use the graphic to calculate consumer surplus, producer surplus, economics surplus, government revenue, and deadweight loss. Do so under each of the following three situations: 1) no trade, 2) free trade, and 3) the sugar tariff.
Chapter 8 Solutions
Microeconomics Plus Mylab Economics With Pearson Etext -- Access Card Package (2nd Edition) (the Pearson Series In Finance)
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- A country imposing a tariff can benefit in terms of social welfare if A. The terms-of-trade benefit exceeds the sum of production and consumption distortion loss. B. The tariff revenue exceeds the sum of production and consumption distortion loss. C. The consumer surplus loss is less than the producer surplus gain. D. The terms-of-trade benefit exceeds the consumer surplus loss. Explain your answer in up to 200 words and using a diagramarrow_forwardUse the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question. After trade, at a world price of Pw, the net gain of total economic surplus equals area(s) a. B+C+D b. A+B+C+D c. B+C d. Darrow_forwardUse Supply and Demand graphs to support your answer in each of the following cases: A: What happens to consumer, producer and total economic surplus when we import a good? B: What happens to consumer, producer and total economic surplus when we export a good? C: What happens to consumer, producer and total economic surplus if we impose a tariff on imports? D: What happens to consumer, producer and total economic surplus if we impose an export duty (tax paid by the producer) on exports.arrow_forward
- Referring to the graph above, if the world price is $8, consumer surplus (relative to the no trade situation): A. Increases by $60, and producer surplus decreases by $120 B. Increases by $80, and producer surplus increases by $80 C. Decreases by $60, and producer surplus decreases by $80 D. Decreases by $80, and producer surplus increases by $120arrow_forward1. Welfare effects of free trade in an exporting country Consider the Bolivian market for lemons. The following graph shows the domestic demand and domestic supply curves for lemons in Bolivia. Suppose Bolivia's government currently does not allow international trade in lemons. Use the black point (plus symbol) to indicate the equilibrium price of a tonne of lemons and the equilibrium quantity of lemons in Bolivia in the absence of international trade. Then, use the green point (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple point (diamond symbol) to shade the area representing producer surplus in equilibrium.arrow_forwardThe United States represents a small part of the world orange market. Draw a diagram depicting the equilibrium in the U.S. orange market without international trade. Identify the equilibrium price, equilibrium quantity, consumer surplus, and producer surplus. Suppose that the world orange price is below the U.S. price before the trade and that the U.S. orange market is now opened to trade. Identify the new equilibrium price, quantity consumed, quantity produced domestically, and the quantity imported. Also, show the change in the surplus of domestic consumers and producers. Has domestic total surplus increased or decreased?arrow_forward
- A country imposing a tariff can benefit in terms of social welfare if A. The terms-of-trade benefit exceeds the sum of production and consumption distortion loss. B. The tariff revenue exceeds the sum of production and consumption distortion loss. C. The consumer surplus loss is less than the producer surplus gain. D. The terms-of-trade benefit exceeds the consumer surplus loss. (1 mark) Explain your answer in up to 200 words and using a diagram (4 marks)arrow_forward3. Consumer surplus and producer surplus from market exchange Consider the Bolivian market for lemons. The following graph shows the domestic demand and domestic supply curves for lemons in Bolivia. Suppose Bolivia's government currently does not allow the international trade in lemons. Use the black point (plus symbol) to indicate the equilibrium price of a ton of lemons and the equilibrium quantity of lemons in Bolivia in the absence of international trade. Then, use the green point (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple point (diamond symbol) to shade the area representing producer surplus in equilibrium. Note: Select and drag a fill area point from the palette to the graph. To fill in regions on the graph, merely drop the fill area point on the desired region. Based on the previous graph, total surplus in the absence of international trade is $____ million.arrow_forwardUse Supply and Demand graphs to support your answer in each of the following cases: A: What happens to consumer, producer and total economic surplus when we import a good? B: What happens to consumer, producer and total economic surplus when we export a good? C: What happens to consumer, producer and total economic surplus if we impose a tariff on imports? D: What happens to consumer, producer and total economic surplus if we impose an export duty (tax paid by the producer) on exports. Do D For answers for A, B and C - https://www.bartleby.com/questions-and-answers/use-supply-and-demand-graphs-to-support-your-answer-in-each-of-the-following-cases-a-what-happens-to/83ac814e-a7b7-43aa-90ca-ef02bf2da559arrow_forward
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