4. Welfare Impact of Trade Continue to refer to the previous diagram: https://drive.google.com/file/d/1sua-NWRPupuFKM1JbN9g6TuBmRxyAjgC/view?usp=sharing Which of the following statements is true about Econland when it goes from not participating in international trade to participating in international trade? Suppose there is no government policy, and that the world price is $2. Overall, Econland is better off with international trade because consumers and producers are both better off than when they were not trading with another country. Overall, Econland is better off with international trade, but consumers are worse off and producers are better off than when they were not trading with another country. Overall, Econland is worse off with international trade because total surplus is lower than when they were not trading with another country. Overall, Econland is worse off with international trade, but consumers are better off and producers are worse off than when they were not trading with another country. o Overall, Econland is better off with international trade, but consumers are better off and producers are worse off than when they were not trading with another country.

The United States has historically imposed import tariffs on goods that include tobacco, canned tuna, steel, and aluminum. Suppose the market for tobacco is illustrated by the accompanying graph. a. As shown, the world price is $2 per pound. Suppose the U.S. imposes a tariff of $1 per pound. Adjust the price line labeled "World price with tariff" (at the top of the graph) to reflect this tariff.   b. Use the letters and values in the graph to fill in the following table.   Without tariff With import tariff Price     Quantity demanded     Quantity supplied     Domestic consumer surplus     Domestic producer surplus     Government revenue     Total economic surplus       c. If the government decides to replace the tariff with a quota that will have the same effect on the market as the tariff, the quota should restrict imports to____________________( 1million pounds, 2 million…

Questions 12-15 refer to the simple (free) trade model graph of country A on the right that shows what happens to welfare of consumers, producers, and total, when country A opens its border to trade. The domestic price and world price are Pp and Pw, respectively. The equilibrium quantity under autarky (no trade) is Qp. After trade, domestic producers supply Qa and (Qw Qa) is imported from the rest of the world. Domestic Supply (S) Price (in US $) ↑ G PD H Pw Export Supply K Domestic Demand (D) 12. What is the gain in consumers' surplus (CS) after free trade? [Select one] а. Н Qa QD Qw Quantity b. I+J с. Н+1+] d. H +I+J+ K 13. What is the gain in total welfare (CS+PS) after free trade? [Select one] а. Н b. I+J с. Н +1+] d. H +1+J+ K 14. Fill in the blanks: "Due to free trade, gain welfare and lose welfare, respectively. a. consumers, producers b. producers, government c. consumers, government d. government, producers 15. What is the minimum "area" of surplus that needs to be transferred…

M2. Every country can produce two goods-masks and wheat, using only their citizens' time. Consider the countries of Northumbria and Wessex. a) There is no trade. Northumbria produces more masks this year compared to last year because of a plague. Assume that the number of people in Northumbria and the time they spend in production stays the same during the plague. Claim: As Northumbria can increase mask production, it was not producing efficiently pre-plague. Agree, Disagree or It depends? Explain your reasoning. A diagram is not an explanation. Your explanation needs to be sufficient without a diagram. b) The plague is over. Northumbria trades with Wessex. With trade, Northumbria produces only wheat, and Wessex produces both wheat and masks. Claim: Wessex does not benefit from trade with Northumbria as it produces both goods. A country can only benefit from trade if it is fully specialized. Agree, Disagree or It depends? Explain your reasoning. A diagram is not an explanation. Your…