Question
In: Economics
The following information is for all three questions. Suppose the country of Coventry is joining a...
The following information is for all three questions. Suppose the country of Coventry is joining a customs union (CU). It can buy Product S from the country of Plata or the country of Soyuz. Plata is not in the CU, while Soyuz is in the CU. Before joining the CU, Coventry has a tariff on all imports of Product S. After joining the CU, Coventry does not have a tariff on the Product S imported from other countries in the CU, but maintains its tariff on the Product S imported from countries outside the CU. The tariff, when applicable, is $7. (Use the Basic Tariff Model in this analysis and assume no foreign retaliation on this product.)
1. The price of Product S from Plata is $62 and the price of Product S from Soyuz is $73. Suppose Coventry changes from not being in the CU to being in the CU.
(a) Who is Coventry's supplier of Product S before joining the CU? After joining the CU?
(b) Is there a trade creation effect in this case?
(c) Is there a trade diversion effect in this case? Why?
(d) What happens to the Coventry Total Surplus for Product S because it joined the CU? Why?
2. The price of Product S from Plata is $62 and the price of Product S from Soyuz is $65. Suppose Coventry changes from not being in the CU to being in the CU.
(a) Who is Coventry's supplier of Product S before joining the CU? After joining the CU?
(b) Is there a trade creation effect in this case?
(c) Is there a trade diversion effect in this case? Why?
(d) What happens to the Coventry Total Surplus for Product S because it joined the CU? Why?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
The following information is for all three questions. Suppose the country of Coventry is joining a...
The following information is for all three questions. Suppose
the country of Coventry is joining a customs union (CU). It can buy
Product S from the country of Plata or the country of Soyuz. Plata
is not in the CU, while Soyuz is in the CU. Before joining the CU,
Coventry has a tariff on all imports of Product S. After joining
the CU, Coventry does not have a tariff on the Product S imported
from other countries in the...
Suppose the country of Coventry is joining a customs union (CU). It can buy Product S...
Suppose the country of Coventry is joining a customs union (CU).
It can buy Product S from the country of Plata or the country of
Soyuz. Plata is not in the CU, while Soyuz is in the CU. Before
joining the CU, Coventry has a tariff on all imports of Product S.
After joining the CU, Coventry does not have a tariff on the
Product S imported from other countries in the CU, but maintains
its tariff on the Product...
Suppose the country of Coventry is joining a customs union (CU). It can buy Product S...
Suppose the country of Coventry is joining a customs union (CU).
It can buy Product S from the country of Plata or the country of
Soyuz. Plata is not in the CU, while Soyuz is in the CU. Before
joining the CU, Coventry has a tariff on all imports of Product S.
After joining the CU, Coventry does not have a tariff on the
Product S imported from other countries in the CU, but maintains
its tariff on the Product...
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110
290
100
215
110
240
100
265
100
240
100
240
95
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265
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240
90
215
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290
90
240
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0
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Answer the following questions on the basis of the three sets of data for the country of North Vaudeville: a. Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville? The data in (Click to select). Which set of data illustrates aggregate supply in the short run in North Vaudeville? The data in (Click to select) ). Which set of data illustrates aggregate supply in the long run in North Vaudeville? The data in (Click to select) . b. Assuming no change in...
Answer the following questions on the basis of the three sets of data for the country of North Vaudeville
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Payable
$????
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