Question
In: Economics
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 to a tariff. Explain why the subsidy is generally regarded as the more desirable policy instrument.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
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...
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 exports good Z. Some of the total quantity of Zthat is...
Consider a small country that exports good Z. Some of the total
quantity of Zthat is domestically produced is consumed by domestic
consumers and the rest of it is exported. Then suppose that the
government places a subsidy s on each unit of Z exported. While,
obviously, this subsidy increases the quantity of Zexported, some
of the production of Z continues to be purchased by domestic
consumers. Show the effects of this export subsidy using a
carefully labeled demand and...
Consider a large country that exports good Z. Some of the total quantity of Z that...
Consider a large country that exports good Z. Some of the total
quantity of Z that is domestically produced is consumed by domestic
consumers and the rest of it is exported. Then suppose that the
government places a subsidy s on each unit of Z exported. While,
obviously, this subsidy increases the quantity of Z exported, some
of the production of Z continues to be purchased by domestic
consumers. Show the effects of this export subsidy using a
carefully labelled...
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...
Show and explain the case where the small nation Country 1 imports Good A. Initially it...
Show and explain the case where the small nation Country 1
imports Good A. Initially it has an import tariff on Good A, then
it eliminates the tariff. Depict this graphically. [Be sure to
label the axes and curves of your graph. Label the appropriate
surplus areas with letters.]
(a) When the country changes from having a tariff to no tariff,
what happens to (i) producer surplus, (ii) consumer surplus, (iii)
deadweight loss, and (iv) government tariff revenue? (Describe the...
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.”
Consider a country that is small in the market of a particular good, facing an international...
Consider a country that is small in the market of a particular
good, facing an international price of 30. In this country, the
demand is given by D = 400 - 5P and the supply is given by
S = -200 + 10P.
1) What is the total welfare when there is free trade?
2) What is the welfare change caused by a 5 dollar import
tariff?
3) Should this country impose the 5 dollar tariff? (Yes/No)
4) Now assume...
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