Question
In: Economics
A small nation permits free trade in good X. At the good’s free-trade price of $8,...
A small nation permits free trade in good X. At the good’s free-trade price of $8, domestic firms supply 6 million units and imports account for 4.2 million units. Recently, the small country has erected trade barriers with the result that imports have fallen to zero, price has risen to $10, and domestic supply has increased to 8 million units. Calculate the change in consumer surplus and producer surplus resulting from the trade barrier. What is the deadweight loss?
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
A small nation permits free trade in good X. At the good’s free-trade price of $8,...
A small nation permits free trade in good X. At the good’s
free-trade price of $8, domestic firms supply 6 million units and
imports account for 4.1 million units. Recently, the small country
has erected trade barriers with the result that imports have fallen
to zero, price has risen to $10, and domestic supply has increased
to 8 million units. Calculate the change in consumer surplus and
producer surplus resulting from the trade barrier. What is the
deadweight loss?
1. Suppose that Nation 1 can import good X from Nation 2 at a price P1=1.20...
1. Suppose that Nation 1 can import
good X from Nation 2 at a price P1=1.20 or from Nation 3
at a price P2=1.50. If the domestic demand and supply
curves are given by the following equations:
Demand: P=80-2Q
Supply: P=5+3Q
Under free trade, how many units of good X are consumed? How
many units of good X are produced domestically? How many units of
good X are imported? From which Nation?
If a 30% import tariff is imposed,...
A small price-taking nation imports a good that it could not possibly produce itself at any...
A
small price-taking nation imports a good that it could not possibly
produce itself at any finite orice. Can you describe plausible
conditions under which that nation would benefit from an import
tarrid on the good?
Suppose that the market for good X is free and competitive, where the equilibrium price and...
Suppose that the market for good X is free and competitive,
where the equilibrium price and quantity, are $30 per ton and 10
million tons per year, respectively. The producers of good X
complain to the government that the current market price is too low
to provide them with sufficient income, and they want the
government to set a price floor of $40 per ton and to purchase all
resulting surplus in order to guarantee that the price support is...
TRUE/FALSE When a country allows free trade of a good, if the world price is higher...
TRUE/FALSE
When a country allows free trade of a good, if the world price
is higher than the domestic price
TRUE/FALSE
If a country’s domestic price of a good is lower than the world
price, then that country has a comparative advantage in producing
that good.
TRUE/FALSE
When a country that imports shoes imposes a tariff on shoes,
buyers of shoes in that country become worse off
TRUE/FALSE.
If a small country imposes a tariff on an imported good,
domestic...
4. A small country imports sugar. With free trade at the world price of $0.10 per...
4. A small country imports sugar. With free trade at the world
price of $0.10 per pound: Domestic production = 120 million
pounds
Domestic consumption = 420 million pounds
Imports = 300 million pounds.
The country’s government now decides to impose a quota that
limits sugar imports to 240 million pounds. With the import quota
in effect, the domestic price rises to $0.12 per pound, and
domestic production increases to 160 million pounds. The government
allocates the licenses to import...
Suppose that market for good X is free and competitive, where the equilibrium price and quantity...
Suppose that market for good X is free and competitive,
where the equilibrium price and quantity are $30 per tops and 10
million tons per year respectively. The producers of good X
complain to the government that the current market price is too low
to provide them with sufficient income, and they want the
government to set a price floor of $40 per ton and to purchase all
resulting surplus in order to guarantee that the price support is
maintained....
Suppose that market for good X is free and competitive, where the equilibrium price and quantity...
Suppose that market for good X is free and competitive, where
the equilibrium price and quantity are $30 per tops and 10 million
tons per year respectively. The producers of good X complain to the
government that the current market price is too low to provide them
with sufficient income, and they want the government to set a price
floor of $40 per ton and to purchase all resulting surplus in order
to guarantee that the price support is maintained....
Suppose Japan is a small rice importer. At the world free trade price, Japan’s domestic production...
Suppose Japan is a small rice importer. At the
world free trade price, Japan’s domestic production of rice is Q1.
In autarky, Japan’s domestic production of rice will be Q2. The
Japanese government believes that to preserve Japanese rice growing
culture, the domestic rice production should be at Q3 and
Q1<Q3<Q2.
Propose three different policies that will be able to achieve
the policy goal of having domestic rice production at Q3.
Rank the three policies by their impact on national...
When a small country engages in free trade, what will be its domestic price? Where can...
When a small country engages in free trade, what will be its
domestic price?
Where can you find the increase in total surplus when a small
country engages in free trade?
If a small country puts a per-unit tariff on an imported
product, will the world price of the product change? Why?
If a large country puts a per-unit tariff on an imported
product, will the world price of the product change? Why?
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