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 of trade creation and/or trade creation (if there is any) of customs union's and its overall effect on the welfare of Belgium? V. Assume instead that Belgium forms a customs union with Ireland. 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 of trade creation and/or trade creation (if there is any) of customs union's and its overall effect on the welfare of Belgium? Table 1: Demand and supply of medicinal products in Belgium Price (€) Quantity Supplied ('000) Quantity Demanded ('000) 27 0 0 1 3 24 2 6 21 3 9 18 12 15 15 12 18 9 21 6 24 3 27 0 4 5 6 7 8 9

Use the graph below and the following information to answer the next question(s). The world price of soybeans is $2.00 per bushel, and the importing country is small enough not to affect the world price. 2.25 2.00 Figure 6.1 60 70 130 140 Q/millions bushels World price Based on Figure 6.1, given a tariff of $0.25 per bushel on soybean imports, how much will domestic production increase?

Economics Question

[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.] [Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences. How to draw the graph?

The following graph shows the domestic supply of and demand for maize in Burundi. The world price (Pw) of maize is $270 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 450 Domestic Demand Domestic Supply 430 410 390 370 350 330 310 290 P 270 250 40 80 120 180 200 240 280 320 360 400 QUANTITY (Tons of maize) If Burundi is open to international trade in maize without any restrictions, it will import tons of maize. Suppose the Burundian government wants to reduce imports to exactly 160 tons of maize to help domestic producers. A tariff of per ton will achieve this. A tariff set at this level would raise $ in revenue for the…

For many years, an international agreement called the Multifiber Agreement limited the amount of textiles that the developed economies of North America and Europe could buy from poor countries in Latin America and Asia. Textiles can be produced by relatively unskilled labor with a reasonably small amount of capital. Who benefited from the protectionism of the Multifiber Agreement? Who suffered? The Multifiber Agreement expired on January 1, 2005. Who should benefit from its end? Who will suffer?  

Which of the following is NOT a reason why countries impose tariffs on imports?   A. Protect domestic industries   B. Retaliation   C. National security   D. None of the above

Question 7 Consider again this same graph: Price 40 8 7 6 5 4 3 2 0 Tariff Domestic supply Domestic demand 10 20 30 40 50 60 70 80 World price Quantity Tell me the amount of gains from trade, carefully following all numeric instructions.

Create a diagram similar to Figure 1.4 in which demand in both countries is identical and trade arises because of differences in supply. Do another diagram in which supply is identical across nations but differences in demand lead to trade.  

b. Analyze the impact of tariffs on domestic industries and consumer welfare, considering both short-term and long-term effects.