2. Winners and losers from free trade Consider the imaginary economy of Meekerton and the market for meekies, a hypothetical good. Without international trade the domestic price of meekies is $21. Suppose that the world price of meekies is $33. Assume that if it were to enter the international market for meekies, Meekerton is tom small to influence the world price. If Meekerton decides to participate in free trade, then it will, meekies. Given current economic conditions in Meekerton, complete the following table by indicating whether each of the statements is true or false. Statement True False Meekertonian producers were better off without free trade than they are with it. Meekertonian consumers are better off under free trade than they were before. ° о True or False: When a nation is too small to affect world prices, allowing free trade will have a non-negative effect on total surplus in that country, regardless of whether it imports or exports as a result of international trade. O True

2. Winners and losers from free trade Consider the imaginary economy of Meekerton and the market for meekies, a hypothetical good. Without international trade the domestic price of meekies is $21. Suppose that the world price of meekies is $33. Assume that if it were to enter the international market for meekies, Meekerton is tom small to influence the world price. If Meekerton decides to participate in free trade, then it will, meekies. Given current economic conditions in Meekerton, complete the following table by indicating whether each of the statements is true or false. Statement True False Meekertonian producers were better off without free trade than they are with it. Meekertonian consumers are better off under free trade than they were before. ° о True or False: When a nation is too small to affect world prices, allowing free trade will have a non-negative effect on total surplus in that country, regardless of whether it imports or exports as a result of international trade. O True

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Using the diagram above, suppose the country is initially engaged in free trade and the world price is $11. If the government introduces a tariff of $4, what is value of the welfare loss to the domestic economy? Group of answer choices a. $200 b. $225 c. $100 d. $400 e. $375
The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 8 ↑ Price 20 10 200 400 600 300 units of the good. Refer to Figure 9-22. With free trade, the country imports 600 units of the good. 900 units of the good. – 1,200 units of the good. 800 1000 1200 1400 1600 1800 2000 2200 Domestic Supply Domestic Demand 2400 Quantity
3. Question 3 A country, called 'Bikyland', does not allow for international trade. Bikyland produces motorbikes for her own consumption. At the equilibrium without international trade, the domestic price (Pdom) is $2000 per motorbike and the quantity (Qdom) is 5 million motorbikes. Then, Bikyland opens up her motorbike market for trade and finds that the world price (Pw) is $2500 per motorbike. Domestic supply (Qsdom) rises to 6 million and domestic demand (QDdom) falls to 4 million motorbikes. 3.1 Draw a graph of the motorbike market with SC, DC, Pdom Qdom Pw, Qsdom and Qpdom- Your graph should show all the numbers. 3.2 At the equilibrium without trade, calculate the revenue that producers/suppliers receive. 3.3 What is the domestic price of motorbikes after international trade is allowed? Will Bikyland become an importer or an exporter? Give a reason for your answer. 3.4 Does joining international trade lead to a shortage or surplus of supply? What is the amount? 3.5 Calculate the…
100 80 60 40 20 Nation 1 'С 14 0 10 30 50 70 90 P=0.2Y/X Pa-1 140 120 100 80 60 40 20 X 110 130 150 0 20 Two products: X and Y Two nations in the world: nation 1 and nation 2 International price: P=1Y/X What product does nation 1 have a comparative advantage in? 2 40 Nation 2 60 A' th P=1Y/X 80 100 120 X
P Domestic Market for Good X Pi P₂ & P Pw Po 0 0 Q₁ Q2 Q Consider the domestic market for Good X in Country A, graphed above. Po-$5, P1-$25, P2-$20, P=$15, Pw-$10, Q1-40, Q-80, Q2-120. The world market outside country A observes a price Pw for Good X. When international trade is allowed, what is the quantity exchanged of Good X in Country A?
Instead of textiles, let us consider the case of computers. Suppose by developing a domestic computer industry, Cambodia can encourage entrepreneurship in the tech sector and hence, the social marginal cost in this industry is lower than private marginal cost. Cambodia is a small country in the world market for computers. As a trade policy advisor to Cambodia, which policy/policies would you advise? Select one or more: a imposing small import tariff to encourage domestic production of computers b. offering large producer subsidy to encourage domestic production of computers c. imposing no tariff or production subsidy d. offering no production subsidy, but only large tariff
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2. Winners and losers from free trade Consider the imaginary economy of Meekerton and the market for meekies, a hypothetical good. Without international trade the domestic price of meekies is $38. Suppose that the world price of meekies is $36. Assume that if it were to enter the international market for meekies, Meekerton is too small to influence the world price. If Meekerton decides to participate in free trade, then it will Given current economic conditions in Meekerton, complete the following table by indicating whether each of the statements is true or false. Statement meekies. Meekertonian producers were worse off without free trade than they are with it. Meekertonian consumers were better off without free trade than they are with it. True False True True or False: When a nation is too small to affect world prices, allowing free trade will sometimes decrease total surplus in that country, regardless of whether it imports or exports as a result of international trade. False
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12. If the free trade price is lIP and this country imposes a trade tariff of $3, what will be the resulting net welfare loss to the economy? a)$3 b)$27 C)$13.5 d)$40.5 e)$9 13. if the free trade price is IP and this country imposes an import quota of 6 units, what will be the welfare loss to this economy? a)$3 b)$27 c)$13.5 d)$40.5 e)$18
a. Table 1 represents the demand and supply schedules of medicinal products for Belgium, a small nation that is unable to affect the world price. i. Draw the demand and supply schedules of medicinal products for Belgium [preferable on the graph paper provided]. ii. Suppose that Ireland and Germany can supply medicinal products to Belgium at a price of €10 and €15 per pack, respectively. Under free trade, which nation exports medicinal products to Belgium? How many medicinal products does Belgium consume, produce, and import? iii. Assume that Belgium imposes a 100 percent nondiscriminatory ad valorem tariff on its medicinal products imports. Which nation exports medicinal products to Belgium? How many medicinal products will Belgium consume, produce, and import? iv. Assume now that Belgium forms a customs union with Germany. Is the customs union that belgium forms with Germany trade creating, trade diverting, or neither? Provide a reason for your choice of answer. What is the Euro value…
2. Winners and losers from free trade Consider the imaginary economy of Meekerton and the market for meekies, a hypothetical good. Without international trade the domestic price of meekies is $25. Suppose that the world price of meekies is $28. Assume that if it were to enter the international market for meekies, Meekerton is too small to influence the world price. If Meekerton decides to participate in free trade, then it will export meekies. Given current economic conditions in Meekerton, complete the following table by indicating whether each of the statements is true or false. Statement Meekertonian producers were better off without free trade than they are with it. Meekertonian consumers are better off under free trade than they were before. O True o False True False True or False: When a nation is too small to affect world prices, allowing free trade will sometimes decrease total surplus in that country, regardless of whether it imports or exports as a result of international…