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 world as a whole?

Expert Solution

a) US consumers are paying $5 extra for Mexican import than Chinese import without tariff
With the tariff, US consumers were paying ( 1 million * $10 ) = $10 million
Net consumer surplus is -10 million USD

for Mexican import, there were paying
1.2 million * 5 = 6 million
net gain against Chinese import
10 million - 6 million = 4 million

b) US producers could have sold shoes to $30 in the domestic market but because of Mexican import, they could sell it at $25. They will have to bear $5 per pair
1.2 million * 5 = 6 million
Net losses = 6 million USD

c) US government is losing all its tariff because of Mexican import

1 million * $10 = 10 million USD

d) Trade is a win-win situation for all the nations and its consumers as well as producers.
China is producing cheaper shoes which means US consumers will be benefited from Chinese import at less cost and that will result in higher consumer surplus. However, because of the tariff, US consumers are at a disadvantage Chinese producers also lost because of the tariff as their product is uncompetitive.

Rahul Sunny answered 1 year ago

For the past two years, the United States has imposed tariffs (tax) on imports from China....

For the past two years, the United States has imposed tariffs (tax) on imports from China. According to the theories we have studied so far in the course, identify the losers and winners of this trade restriction in the United States. Why does economic theory predict that the United States as a whole loses from the trade restriction? Be sure to answer the question based on what you have learned in the course.

When tariffs are imposed on European imports of shoes from China and Vietnam, who stands to...

When tariffs are imposed on European imports of shoes from China and Vietnam, who stands to gain? Who stands to lose? 2. European policymakers object to the fact that some Asian shoe production is government susidized. But as an editorial in the Financial times noted “ If Beijing and Hanoi want to subsidize European consumers to build their shoe collections, let them “. Do you agree? 3. Antidumping countries can be described as a form of protectionism. As the global economic crisis...

In order to provide relief from the surge in imports of hangers into the United States,...

In order to provide relief from the surge in imports of hangers into the United States, a tafiff was recently imposed on wire hangers that increased the price from $20 to $40 per box of 500 hangers. Initially, there were three (3) million boxes of hangers produced domestically and 12.5 million boxed consumed (primarily by the nearly 30,000 dry cleaning establishments located around the United States). After the implementation of the tariff the domestix quantity produced increase from to...

The United States imports cheese from a variety of countries. The table gives the domestic supply of, and demand for, cheese in the United States.

Price (dollars per pound)Quantity supplied (thousands of pounds per year)Quantity demanded (thousands of pounds per year)21120601810010015801401260180940220The United States imports cheese from a variety of countries. The table gives the domestic supply of, and demand for, cheese in the United States. The world price of cheese is $12 per pound, and trade is unrestricted.a. How many pounds of cheese are consumed in the U.S?b. How many pounds of cheese are produced in the U.S?c. How many pounds of cheese are imported...

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...

United States has approximately 1.1 Million International Students out of which 3,50,000 students are from china,...

United States has approximately 1.1 Million International Students out of which 3,50,000 students are from china, 200,000 from India. Every year, approximately 20,000 Indian students come to United states for pursuing university education. The Minitab file has 500 students sample out of 20,000 in 2017. Based on this… What is the range of GRE score in which TRUE POPULATION mean may belong? What is your understanding from this question? N Mean StDev SE Mean 90% CI for μ 95% CI...

Suppose the United States could import footwear from Thailand at the price of $20 per pair...

Suppose the United States could import footwear from Thailand at the price of $20 per pair or from Mexico at $24 per pair. The domestic price of footwear in the United States is $35. Suppose prior to NAFTA, the U.S. imposed a 50% tariff on all footwear entering the country. a. Prior to NAFTA, would the United States import footwear? If yes, from which country? (3 points) b. Suppose the US demand for footwear is given by Q = 100...

Suppose the United States could import footwear from Thailand at the price of $20 per pair...

Suppose the United States could import footwear from Thailand at the price of $20 per pair or from Mexico at $24 per pair. The domestic price of footwear in the United States is $35. Suppose prior to NAFTA, the U.S. imposed a 50% tariff on all footwear entering the country. Suppose the US demand for footwear is given by Q = 100 – 2P. Assume US producers face a constant MC = $35. What is the welfare effect of joining...

Suppose that during a recent year for the United States, merchandise imports were $2.2 trillion, unilateral...

Suppose that during a recent year for the United States, merchandise imports were $2.2 trillion, unilateral transfers were a net outflow of $0.2 trillion, service exports were $0.3 trillion, service imports were $0.1 trillion, and merchandise exports were $1.6 trillion. The merchandise trade deficit was ? trillion. (Enter your response rounded to one decimal place.) The balance on goods and services was ? trillion. (Enter your response rounded to one decimal place and include a minus sign if necessary.) The...

Suppose members of the United States, Mexico, and Canada trade agreement (USMCA) agree to reduce imports...

Suppose members of the United States, Mexico, and Canada trade agreement (USMCA) agree to reduce imports of foreign oil and set a price floor for North American oil. Briefly describe the impact this might have for Alberta oil producers, and for Canadian oil consumers. (200 words)

Question

Suppose that the united states currently imports 1.0 million pairs of shoes from china at $20...

Solutions

Expert Solution

Related Solutions

For the past two years, the United States has imposed tariffs (tax) on imports from China....

When tariffs are imposed on European imports of shoes from China and Vietnam, who stands to...

In order to provide relief from the surge in imports of hangers into the United States,...

The United States imports cheese from a variety of countries. The table gives the domestic supply of, and demand for, cheese in the United States.

Consider a good that the U.S. imports, such as shoes. a) Suppose there is a fall...

United States has approximately 1.1 Million International Students out of which 3,50,000 students are from china,...

Suppose the United States could import footwear from Thailand at the price of $20 per pair...

Suppose the United States could import footwear from Thailand at the price of $20 per pair...

Suppose that during a recent year for the United States, merchandise imports were $2.2 trillion, unilateral...

Suppose members of the United States, Mexico, and Canada trade agreement (USMCA) agree to reduce imports...