EBK PRINCIPLES OF MICROECONOMICS
7th Edition
ISBN: 8220100469640
Author: Mankiw
Publisher: Cengage Learning US
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Chapter 9, Problem 1PA
Subpart (a):
To determine
The impact of international trade.
Sub part (b):
To determine
The impact of international trade.
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The world price of wine is below the price that would prevail in Canada in the absence of trade. Assume that Canadian imports of wine are a small part of
total world wine production.
The following graph shows the Canadian market for wine under free trade.
Use the green triangle (triangle symbol) to shade consumer surplus when Canada is open to trade. Then use the purple triangle (diamond symbol) to
shade producer surplus in this case.
Price of Wine
Domestic Demand
Quantity of Wine
Domestic Supply
World Price
Consumer Surplus
Producer Surplus
(?)
Assume that Canada is an importer of televisions and that there are no trade restrictions. Canadian consumers buy 1.2 million televisions per year, of which 600,000 are produced domestically and 600,000 are imported.
Suppose that a technological advance among Japanese television manufacturers causes the world price to fall $800 to $700. Draw a graph to show how this change affects the welfare of Canadian consumers and Canadian producers and how it affects total surplus in Canada. Label the diagram carefully to show all the areas using letters of alphabets. (Do not shade the areas).
After the fall in price, consumers buy 1.4 million televisions, of which 400,000 are produced domestically and 1 million are imported. Calculate the change (this will be only the area either gained or lost by consumers and producers) in consumer surplus, producer surplus and total surplus due to price reduction. Provide numerical answers by calculating the area of change in surplus due to fall in…
Use the Graph below to answer the questions about International Trade:
Price
P1
P2
P3
A
B
D
F
с
E
D
-Quantity
a. At equilibrium, what area represents Consumer Surplus? Blank 1 and Blank 2.
b. At equilibrium, what area represents Producer Surplus? Blank 3 and Blank 4.
c. Which Price Level would make this country become an importer of this good? Blank 5
d. Which Price Level would make this country become an exporter of this good? Blank 6
Chapter 9 Solutions
EBK PRINCIPLES OF MICROECONOMICS
Ch. 9.1 - Prob. 1QQCh. 9.2 - Prob. 2QQCh. 9.3 - Prob. 3QQCh. 9 - Prob. 1CQQCh. 9 - Prob. 2CQQCh. 9 - Prob. 3CQQCh. 9 - Prob. 4CQQCh. 9 - Prob. 5CQQCh. 9 - Prob. 6CQQCh. 9 - Prob. 1QR
Ch. 9 - Prob. 2QRCh. 9 - Prob. 3QRCh. 9 - Prob. 4QRCh. 9 - Prob. 5QRCh. 9 - Prob. 6QRCh. 9 - Prob. 1PACh. 9 - Prob. 2PACh. 9 - Prob. 3PACh. 9 - Prob. 4PACh. 9 - Prob. 5PACh. 9 - Prob. 6PACh. 9 - Prob. 7PACh. 9 - Prob. 8PACh. 9 - Prob. 9PACh. 9 - Assume the United States is an importer of...Ch. 9 - Prob. 11PA
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