Part a) With free trade the reference price is $14 and total output is 40,000. Domestic production is 20,000 and import is equal to 40,000 – 20,000 = 20,000. The total value of import is given as
Total value of imports = 20,000 × 14
Total value of imports = $280,000
Part b) If the government imposes a tariff, then there will be decline in the consumer surplus. The consumer surplus will decline from the area of the triangle ABC to the area represented by ABDE. However, producer surplus will increase from area of the triangle FGH to area of the triangle HBD. In the present case tariff is equal to $6 per unit.
Part c) The area of the square DIJC represents the tax revenue from the tariff imposed by the government.
Part d) The national cost of the tariff is the deadweight loss represented by the area of triangle GID and area of the triangle CJK. Deadweight loss is the cost to the society due to the inefficiency created by market distortion through tools like tariff.
Part e) If the government imposes a quota of 10,000, then also net national cost of quota would be the same as that of tariff. It is shown in the following diagram.
PA P world Tariff $20 $14 P world Quota . D (Thousands) 20 25 35 40...
30 25 20 Pwfl+t) 15 Pw 10 0 10 20 30 40 50 60 70 80 90 100 Q -jets Suppose the world market price of jets is P 10 but that economic policy initia What is the closed economy market equilibrium price and quantity of of jets? P all jet If imports are allowed at Pr = 10 , how many jets would be imported? o and domestic produced supply indicate domestic demand on the horizontal axis on the...
Need help on Questions 9 and 10. Is the tariff imposed on the equilibrium price at $6 or is it imposed on the World Trade price at $2? Consumer Surplus, Producer Surplus and Net Benefits (Show all your work). Name (Print): Course: Use the following graph for questions 1-15. P $12- Supply SIO $8 S6 54 SZVU Demand $0 10 211 30 40 50 P.S Quantity 1. Estimate an equation for the demand and supply curves shown in the diagram...
P $20 Domestic Producers S10 Domestic Consumers 20 10 Use the graph above for a Tariff. Equilibrium is point A at (10,10) 10. World price is at S3, calculate the additional producer surplus. 11. World price is at $3, calculate the loss of producer surplus. 12. World price is at S3, calculate the additional consumer surplus. 13. World price is at S3, calculate the loss of consumer surplus. 14. World price is at S3, calculate the total producer surplus. 15....
Paradise is a small country that under free trade imports roses at $2.00 a dozen. Its domestic demand curve and domestic supply curve for roses are as follows: D = 100 - 10 P S = 10 + 10 P Calculate the equilibrium quantity imported under free trade. Under free trade: M = _________ If the government imposes a tariff of $1.00 on roses show graphically and calculate the impact of this tariff Graph: Under tariff: Domestic...
1. Suppose Home is a small country. Use the graphs below to answer the questions. a. Calculate Home consumer surplus and producer surplus in the absence of trade. b. Now suppose that Home engages in trade and faces the world price, P* = $6. Determine the consumer and producer surplus under free trade. Does Home benefit from trade? Explain. c. Concerned about the welfare of the local producers, the Home government imposes a tariff in the amount of $2 (i.e....
can someone help me with this question please 2. (30 points) Suppose the world price for a good is 50 and the domestic demand and supply curves are given by the following equations: Demand: P = 100 - 20 Supply: P = 20 + 30 How much is consumed? How much is produced at home? What are the values of consumer and producer surplus? If a tariff of $6 per unit is imposed, by how much docon change? unit is...
Aplia Homework: International Trade 3. Welfare effects of a tariff in a small country Suppose Zambia is open to free trade in the world market for soybeans. Because of Zambia's small size, the demand for and supply of soybeans in Zambia do not affect the world price. The following graph shows the domestic soybeans market in Zambia. The world price of soybeans is Pw-$400 per ton On the following graph, use the green triangle (triangle symbols) to shade the area...
PL P 21. Problem 16 points Suppose Djibouti is a small part of the world market for hockey sticks and the capital is l-spanka a. (7 points) Draw a graph depicting the cuilibrium in the Dibouti hockey stick market in a world without trade, labeling everything, including the couilibrium price & quantity and both consumer & producer surplus. (You may create demand and supply schedules using numbers if you wish but you are not required to do so). Please show...
Trade policy. The demand for high-end Workstations in the United States is given by QD = 100 − P , where QD is the quantity demanded expressed in thousands of units, and P is the price measured in thousands of dollars. The supply is given instead by QS = P. For this exercise we will assume that the US are a small country in the world’s Workstations market and that the prevailing world price is given by P W =...
area 3 Hopefully, you understood the material on Consumer Surplus (CS) and Producer Surplus (PS) Now let's use those concepts to quantify the economic Consequences of imposing an Import tariff price of mangos 1 Assume the graphs represent the domestic market of mangos. Determine the following: competitive market equilibrium price would = domestic market supply curve of mangos competitive equilibrium quantity of magos =_ $3/lb. 2. Now assume the world market equilibrium price of mangos = $1.50/lb. and domestic producers...