Foundations of Economics, Student Value Edition (8th Edition)
8th Edition
ISBN: 9780134489230
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 9, Problem 7SPPA
To determine
The effect of import quota over
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The graph shows the car market in Mexico when Mexico places no restriction on the quantity of cars imported. The world price of a car is $10,000.
Suppose the government of Mexico introduces an import quota on imported cars of 4 million a year.
Draw a line that shows the effect of the import quota on supply. Label it S +
quota.
Label it.
Draw a point to show the quantity of cars bought in Mexico and the price paid.
When the government of Mexico introduces an import quota of 4 million cars, Mexico imports
nothing
million cars and produces
nothing
million cars.
The following graph shows the U.S. domestic market for towels.
PRICE (Dolars)
Domestic Demand
Domestic Supply
24
72
1.20
QUANTITY (Millions of towels)
Price
(World)
Price
(Quota)
(7)
In the absence of foreign trade, the equilibrium price of a towel is
domestic quantity supplied equal
million towels.
At this price, both the domestic quantity demanded and the
Suppose that trade between the United States and China is open and that the United States initially imposes no tariffs or quotas on towels imported
from China. Assume that China has a comparative advantage in producing towels and charges the world price of $12 per towel. (Note: Throughout
the problem, assume that the amount demanded by any one country does not affect the world price of towels.)
On the previous graph, use the grey line (star symbol) to indicate the world price of towels.
million towels, the quantity of towels supplied by
At the world price of $12 per towel, the quantity of towels demanded by U.S. buyers is
U.S.…
You are provided with the following information about the Canadian turkey market:1. The world price of turkey is $5.2. The Canadian turkey market is currently (before the new trade agreement) protected by a tariffrate quota (TRQ) of the following format:a) the in-quota tariff is $1 per unitb) the import quota volume is 100 unitsc) the over-quota tariff is $10 per unit.3. An excess demand (ED) (for imports) function for turkey has been estimated as? = 28 − 0.14?.
Notes: Canada is a small importing country in the world market for turkeys.
Answer the question below:
The Canadian government is considering reducing the in-quota tariff to $0.50. Modify the diagram for this market, and solve for the Canadian turkey price and the volume of imports. Label all relevant functions, axes, etc.
Chapter 9 Solutions
Foundations of Economics, Student Value Edition (8th Edition)
Ch. 9 - Prob. 1SPPACh. 9 - Prob. 2SPPACh. 9 - Prob. 3SPPACh. 9 - Prob. 4SPPACh. 9 - Prob. 5SPPACh. 9 - Prob. 6SPPACh. 9 - Prob. 7SPPACh. 9 - Prob. 8SPPACh. 9 - Prob. 9SPPACh. 9 - Prob. 10SPPA
Ch. 9 - Prob. 11SPPACh. 9 - Prob. 1IAPACh. 9 - Prob. 2IAPACh. 9 - Prob. 3IAPACh. 9 - Prob. 4IAPACh. 9 - Prob. 5IAPACh. 9 - Prob. 6IAPACh. 9 - Prob. 7IAPACh. 9 - Prob. 8IAPACh. 9 - Prob. 9IAPACh. 9 - Prob. 1MCQCh. 9 - Prob. 2MCQCh. 9 - Prob. 3MCQCh. 9 - Prob. 4MCQCh. 9 - Prob. 5MCQCh. 9 - Prob. 6MCQCh. 9 - Prob. 7MCQ
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