Question
In: Economics
Consider a good that the U.S. imports, such as shoes. a) Suppose there is a fall...
Consider a good that the U.S. imports, such as shoes.
a) Suppose there is a fall in the world price of shoes. Show the effects of this development both in a PPC/CPC diagram (with shoes on the horizontal axis and everything else on the vertical axis) and in a supply and demand diagram with international trade. How will the fall in the world price affect U.S. shoe production, U.S. shoe consumption, and U.S. shoe imports?
b)How will the fall in the world price of shoes affect consumer surplus, producer surplus, and total economic surplus in the U.S.?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose that the united states currently imports 1.0 million pairs of shoes from china at $20...
Suppose that the united states currently imports 1.0 million
pairs of shoes from china at $20 each. With a 50% tariff, this made
the consumer price in the United States $30.The price of shoes in
Mexico is $25 suppose that as a result of free trade agreement with
Mexico, the United states imports 1.2 million pairs of shoes from
Mexico and none from china. What are the gains and losses to U.S
consumers, U.S producers, and U.S government and the...
Consider a small country (perfect competition) applying a tariff, t, to imports of a good a....
Consider a small country (perfect competition) applying a
tariff, t, to imports of a good
a. Suppose that the country currently has a tariff on imports,
but decides to reduce it from t to t’. Draw graphs for the Home and
import markets and illustrate this change.
b. What happens to the quantity of goods produced at Home and
their price? What happens to the quantity of imports?
c. Are there gains or losses to domestic consumer surplus due to...
Consider a small country that imports good Z. Some of the total quantity of Z domestically...
Consider a small country that imports good Z. Some of the total
quantity of Z domestically consumed is supplied by domestic
producers and the rest of it is imported. Then suppose that the
government pays a subsidy of S dollars on each unit of Z that is
produced domestically, so that the quantity of Z imported is
somewhat reduced (but not reduced to zero). Draw a demand and
supply diagram that shows the effect of the subsidy. Compare this
subsidy...
Consider a large country that imports good R. Some of the total quantity of R domestically...
Consider a large country that imports good R. Some of the total
quantity of R domestically consumed is supplied by domestic
producers and the rest of it is imported. Then suppose that the
government imposed a tariff on each unit of R that is imported, so
that the quantity of R imported is somewhat reduced. Draw a demand
and supply diagram that shows the effect of the tariff. On your
diagram, 4 of 4 shade-in the area that represents the...
Consider a small country that imports good Z. Some of the total quantity of Z domestically...
Consider a small country that imports good Z. Some of the total
quantity of Z domestically consumed is supplied by domestic
producers and the rest of it is imported. Then suppose that the
government pays a subsidy of S dollars on each unit of Z that is
produced domestically, so that the quantity of Z imported is
somewhat reduced (but not reduced to zero). Draw a demand and
supply diagram that shows the effect of the subsidy. Compare this
subsidy...
Consider a small country that imports good Z. Some of the total quantity of Z domestically...
Consider a small country that imports good Z. Some of the total
quantity of Z domestically consumed is supplied by domestic
producers and the rest of it is imported. Then suppose that the
government pays a subsidy of S dollars on each unit of Z that is
produced domestically, so that the quantity of Z imported
is somewhat reduced (but not reduced to zero). Draw a demand and
supply diagram that shows the effect of the subsidy. Compare this
subsidy...
Consider a small country that imports good Z. Some of the total quantity of Z domestically...
Consider a small country that imports good Z. Some of the total
quantity of Z domestically consumed is supplied by domestic
producers and the rest of it is imported. Then suppose that the
government pays a subsidy of S dollars on each unit of Z that is
produced domestically, so that the quantity of Z imported
is somewhat reduced (but not reduced to zero). Draw a demand and
supply diagram that shows the effect of the subsidy. Compare this
subsidy...
Question (2) Consider a country that imports a good from abroad. For each of following statements,...
Question (2)
Consider a country that imports a good from abroad. For each of
following statements, say whether it is true or false. Explain your
answer.
“The greater the elasticity of demand, the greater the gains
from trade.”
“If demand is perfectly inelastic, there are no gains from
trade.”
“If demand is perfectly inelastic, consumers do not benefit
from trade.”
Suppose when Japan opens to trade, it imports rice, a labor intensive good. According to the...
Suppose when Japan opens to trade, it imports rice, a labor
intensive good.
According to the Heckscher–Ohlin theorem, is Japan capital
abundant or labor abundat? Explain.
What is the impact of opening trade on the real wage in
Japan?
What is the impact of opening trade on the real rental rate on
capital?
What does the Heckscher Ohlin model assume about labor mobility
across industries? Across countries?
Which group (capital owners or workers) would support policies
to limit free trade?...
Consider the market for shoes in the following scenario. Suppose the cost of socks increases, use...
Consider the market for shoes in the following scenario.
Suppose the cost of socks increases, use comparative statics to
show what will happen to price and quantity in the shoe market.
Does your result help explain why shoe companies often produce
socks as well? Explain.
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