Question

w a s Chapter 62006%20Trade%20Exercises%20Winter%202020%20Exercise%20-%201CM.pdf Open Economy (International Trade) The domestic Maize Market for a small closed economy of country XYZ is shown in the model below, and world price is $10/ton. Suppose the government of country XYZ decides to add tariff ($4/ton of import maize) to reduce imports. The model is shown below: Maize Market with Tariff S(domestic) Price/ton Domestic Price (with tariff) -- World Price Ddomestic) 32 35 4 5 25 30 18 20 22 Quantity of tons of Maize (in 1000's) Domestic Demand Domestic Supply - World Price World Price with Tariff Activate W. Go to Settings och

Answer 1

10,000 A) Autarky Price is $22 & quantity is the 2000) change Domestic Market Open economy les CS x(32-10) x22000 = $_242000 PS 1x(10-2)(4000) $16000 -($ 80,000) Open uro with tariff ² (32-14) x 18000 $162000 Ź (14-2)(6000) $36000 O (14-10)(12000 -6000) $ 48000 + $20,000 GS 0 GR +48000 QR 0 O o NEV $ 258000 $246000 - $12000 c) Domestic market open economy change cs - $144000 $(32-10)(22000) $242000 I (10-2) (4000) $ 16000 (open eco with austa (32-18) 14000) $ 98000 {(18-2) (8000) PS +$48000 2 $ 64000 GS 0 GR QR o + (18-10) 14000 – 8000) -$ 48000 48000 $210 000 $258000 NEV - $43000 same as part TB) CS Scanned with CamScanner

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