3. Assume the US wants to open up trade with Sweden in the hot tub market....

3. Assume the US wants to open up trade with Sweden in the hot tub market. Assume that the price in Sweden for hot tubs is higher than it is in the US. Will the US be an importer or an exporter of hot tubs? Explain, in economic terms, why you answered how you did. Draw a properly labeled graph to support your answer.

Assume the US wants to open up trade with Sweden in the hot tub market. Assume that the price in Sweden for hot tubs is lower than it is in the US. Will the US be an importer or an exporter of hot tubs? Explain, in economic terms, why you answered how you did. Draw a properly labeled graph to support your answer.

Expert Solution

3. Assuming US is a large country which can affect world prices. Therefore if domestic prices of hot tubs in Sweden is greater than world price/ US price than US will export tubs to Sweden and Sweden will find it cheaper to procure tubs from US than produce domestically.

This is shown in diagram below. The domestic production is till point B. The rest in pink color area is imported to meet demand at till C.

Further, if price in Sweden is lower than world prices then it cannot affect world prices being a small country. Therefore it will export at higher world markets and US will find it cheaper to source hot tubs from Sweden.

In diagram below, domestic production is till point C. Domestic demand is met till point B. The rest green color area are exports to world/ US.

Rahul Sunny answered 2 years ago

CSI: Hot Tub..too hot to handle? After waking up in the yard with a severe...

CSI: Hot Tub..too hot to handle? After waking up in the yard with a severe hangover, a woman finds her husband dead in the hot tub in Palm Springs. It had been a cool day for January, with temperatures hovering around 60 degrees Fahrenheit. The couple had apparently come home the previous night and gone to the hot tub, which was set at 110 degrees Fahrenheit. Both had been drinking a great deal of wine, and the male had...

Q2) On average, hot-tubs typically take 15 minutes to “heat-up.” A certain hot-tub manufacturer advertises that...

Q2) On average, hot-tubs typically take 15 minutes to “heat-up.” A certain hot-tub manufacturer advertises that its heating equipment can heat a tub in less than 15 minutes. A random sample of 40 tubs of this brand is selected, and the heat-up time was determined for each tub. From the sample, the average heat-up time was ?̅ = 13.9 minutes and the sample standard deviation was ? = 3.2 minutes. Does the data support the company’s claim that its equipment...

1. Suppose that the US Federal Reserve conducts an open market purchase of bonds. Assume a...

1. Suppose that the US Federal Reserve conducts an open market purchase of bonds. Assume a Keynesian framework: a. Use a graph of the supply and demand for bonds to show what would happen to the price of U.S. bonds. Be sure to label your graph carefully. (10 points) b. Use a graph of the money market to show what would happen to U.S. interest rates. Be sure to label your graph carefully (10 points) c. Explain what would happen...

Assume the US imposes a $10 tariff on Swedish hot tubs being imported to the US....

Assume the US imposes a $10 tariff on Swedish hot tubs being imported to the US. Graph the effects of this tariff, showing the following items on the graph: (10 points) consumer surplus producer surplus government revenue deadweight loss what happens to the price after the tariff what happens to the quantity of supply and demand after the tariff Use letters to label the different areas on the graph where need

Assume an open, mixed economy. That is, foreign trade is part of the economy, and the...

Assume an open, mixed economy. That is, foreign trade is part of the economy, and the economy includes both a public (government) and a private (consumers and businesses) sector. Given this, aggregate demand is expressed as (C + I + G + X). Assume the MPC is .7. Assume a stimulus package of $100 billion has been approved by Congress and the money has been spent. In order to pay for those expenditures, Congress also approved a $100 billion increase...

Assume an open, mixed economy. That is, foreign trade is part of the economy, and the...

Assume an open, mixed economy. That is, foreign trade is part of the economy, and the economy includes both a public (government) and a private (consumers and businesses) sector. Given this, aggregate demand is expressed as (C + I + G + X). Assume the MPC is .7. Assume a stimulus package of $100 billion has been approved by Congress and the money has been spent. In order to pay for those expenditures, Congress also approved a $100 billion increase...

If trade opens up between the two countries, Australia and Belgium that were not open to...

If trade opens up between the two countries, Australia and Belgium that were not open to trade before, then Select one: a. the real income of both countries may increase. b. the real income of Australia but not of Belgium will increase. c. the real income of both countries will increase. d. the real income of Australia and of Belgium will increase. e. the real income of neither country will increase.

Suppose Bank of America (BAC) wants to open two subsidies In the US in order to...

Suppose Bank of America (BAC) wants to open two subsidies In the US in order to 1) serve foreign residents living in the US and 2) conduct Int'l banking operations. Describe how BAC would structure these two new business. In other words, what kind of rules would they have to comply with and/or what kind of facilities would BAC have to set-up? Be specific.

Let the home country be a large open economy. Assume that the home country wants to...

Let the home country be a large open economy. Assume that the home country wants to impose capital controls that prohibit foreign borrowing and lending by domestic residents. Analyze the effects of capital controls on country’s CA balance, national savings and investment, and on domestic and world real interest rates. Assume that before the capital controls were imposed, the home country had a large financial account surplus

3. Open market operations versus discount loans Consider an expansionary open market operation. Suppose the Federal...

3. Open market operations versus discount loans Consider an expansionary open market operation. Suppose the Federal Reserve buys government securities from the nonbank public. Suppose that the sellers of government securities deposit the checks drawn on the New York Fed into their bank account. Then, ceteris paribus, bank reserves ___________ (increase / decrease / do not change) , currency in circulation ___________ (increase / decrease / do not change) , and thus the monetary base will ___________ (increase / decrease)....

Question

3. Assume the US wants to open up trade with Sweden in the hot tub market....

Solutions

Expert Solution

Related Solutions

CSI: Hot Tub..too hot to handle? After waking up in the yard with a severe...

Q2) On average, hot-tubs typically take 15 minutes to “heat-up.” A certain hot-tub manufacturer advertises that...

1. Suppose that the US Federal Reserve conducts an open market purchase of bonds. Assume a...

Assume the US imposes a $10 tariff on Swedish hot tubs being imported to the US....

Assume an open, mixed economy. That is, foreign trade is part of the economy, and the...

Assume an open, mixed economy. That is, foreign trade is part of the economy, and the...

If trade opens up between the two countries, Australia and Belgium that were not open to...

Suppose Bank of America (BAC) wants to open two subsidies In the US in order to...

Let the home country be a large open economy. Assume that the home country wants to...

3. Open market operations versus discount loans Consider an expansionary open market operation. Suppose the Federal...