Consider the pharmaceutical market in the US. The demand is Q = 200 - 2P Q P while supply is 2 40s Q P. The free trade price is 25. A) Calculate consumer surplus, producer surplus, total surplus, and imports under free trade. Illustrate all of these on a fully labelled graph. B) Suppose that the US puts a tariff of 6 on pharmaceuticals. When it does this, the free trade prices falls to 24. Calculate consumer surplus, producer surplus, tariff revenues, total surplus and deadweight loss under the tariff. Illustrate all of these on a fully labelled graph. C) Is the country better off under the tariff or free trade? How do you know?
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- China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 11.5 – Q Supply: P = 5.5 + Q Price is in 10 Yuan (¥) per bushel of soybeans and the units for Quantity are 100 million bushels per year. This is to make graphing simpler. This does NOT mean that the price is 10 and quantity is 100. Rather it means that if the price was 40¥ and the quantity was 7,500,000,000 bushels, this would plot as 4 and 7.5 respectively. The world price for soybeans is ¥65/bushel (this would graph as a horizontal line at 6.5). Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including: Domestic Demand curve (D), Domestic Supply curve (S), the World Price (WP), and the Price with tariffs (PT), along with the quantities imported both with and without the tariff. Based on your graph, what…suppose the supply from China is described by Qs=0.01P-1 and the domestic (American) demand is.Qd-11-0.1P The quantities are in millions of phones and the prices are in $/phone. If the U.S. federal government only cared about its own residents' welfare then it would make sense to ignore producer surplus since those benefits accrue to producers in China. The U.S. is considering imposing a small tariff of $t in order to push down the price producers receive and capture more surplus for America. Fill in the table below to find the surplus for America (consumer surplus + tariff revenue) for different sized tariffs. tariffAmerica's surplus $0 $1250 million $100 $1462.5 million $200$____ million $300$ $400$ $500$1562.5 million million millionKorea’s demand for computers isQK = 2, 000 − PkIts supply isQK = −200 + PkChina’s demand for computers isQC = 1, 000 − Pc Its supply isQC = Pc1. Suppose that Korea imposes a specific tariff of $100 on computerimports. Calculate the price of computers in each country and thequantity of computers supplied and demanded in each country. Alsocalculate the volume of trade.
- 10 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps is €1 and there are no import restrictions on this product. Assume that Spanish consumers are indifferent between domestic and imported baseball caps. Instructions: Enter your answers as whole numbers. a. What quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand b. What quantity of baseball caps will be imported? thousand Now suppose a tariff of €1 is levied against each imported baseball cap. C. After the tariff is implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand d. After the tariff is implemented, what quantity of baseball caps will be imported? thousand Price (€ per cap)This figure shows demand and supply for a product in country A, which is interested in engaging in international trade. The import price from country B is $3 and from country C is $4. Country A imposes a fixed tariff of $2 per unit of import. Answer the following questions based on these assumptions. Demand Supply O creation will be FJ O diversion will be FJ O creation will be TS O diversion will be TS Querits Based on information provided in the figure above, if country A decides to enter into a free trade agreement with country B, the amount of tradeb. The United States currently imports all of its coffee. The annual demand for coffee by U.S. consumers is given by the demand curve Q = 250 – 10P, where Q is quantity (in millions of pounds) and P is the market price per pound of coffee. World producers can harvest and ship coffee to U.S. distributors at a constant marginal (= average) cost of $8 per pound. U.S. distributors can in turn distribute coffee for a constant $2 per pound. The U.S. coffee market is competitive. Congress is considering a tariff on coffee imports of $2 per pound. i. If there is no tariff, how much do consumers pay for a pound of coffee? What is the quantity demanded?ii. If the tariff is imposed, how much will consumers pay for a pound of coffee? What is the quantity demanded?
- 1. Your textbook discusses the benefits of cheaper imports on pages 171-173. Draw a graph that shows the effects on consumer and producer surplus (gain or loss) that result from a country importing a good. 2. Recently, China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 115 – 1/15Q Supply: P = 55 + 1/15Q Where P is Yuan per bushel of soybeans and Q is 10 million bushels per year. The world price for soybeans is ¥65/bushel. Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including the Domestic Demand curve, Domestic Supply curve, the World Price, and the Price with tariffs. 3. How many bushels of soybeans can the US export to China if there are no tariffs? How many bushels with the imposed tariff? 4. Who are the greatest benefactors of China’s…Home's demand curve for wheat is P = 10 - (1/20)Qd. Its supply curve is P = 4+ (1/20)Qs Foreign's demand curve for wheat is P * = 8 - (1/20) Qd* Its supply curve is P* = 2+(1/20)Qs* Determine the effect of the tariff on Home import-competing producers APS = Home consumers ACS = Home government tariff revenue AGR= Adding these effects together AWAPS + ACS + AGR =Recently, China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 115 – 1/15Q Supply: P = 55 + 1/15Q Where P is Yuan per bushel of soybeans and Q is 10 million bushels per year. The world price for soybeans is ¥65/bushel. Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including the Domestic Demand curve, Domestic Supply curve, the World Price, and the Price with tariffs. 3. How many bushels of soybeans can the US export to China if there are no tariffs? How many bushels with the imposed tariff?
- Recently, China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 115 – 1/15Q Supply: P = 55 + 1/15Q Where P is Yuan per bushel of soybeans and Q is 10 million bushels per year. The world price for soybeans is ¥65/bushel. Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including the Domestic Demand curve, Domestic Supply curve, the World Price, and the Price with tariffs. 4. Who are the greatest benefactors of China’s tariff on US soybeans?Domestic demand for fidget spinners in the domestic economy is characterized by the equation P = 100 – 2Q, domestic supply is characterized by the equation Q = P – 10, and the world price is equal to 60. Then the export subsidy of 10 per unit will change nothing lead to a decrease in the world príce by 10 O increase domestic exports by 10 O increase domestic exports by 15Consider the Colombian market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Colombia. Suppose Colombia's government currently does not allow international trade in soybeans. Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity of soybeans in Colombia in the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium. Based on the previous graph, total surplus in the absence of international trade is . The following graph shows the same domestic demand and supply curves for soybeans in Colombia. Suppose that the Colombian government changes its international trade policy to allow free trade in soybeans. The horizontal black line (PWPW) represents the world…