ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Consider a hypothetical world consisting of only three countries: Hungary, Australia, and Italy. Each country produces grain. Hungary is a small
economy compared to Australia and Italy and thus cannot influence foreign prices.
On the following graph, the supply and demand schedules of Hungary are shown as Sun and Dun. Foreign supply schedules of grain are perfectly
elastic: Australia is a more efficient supplier of grain than Italy because its supply price is $1.00 per bushel (SAus), whereas Italy's supply price is
$2.00 per bushel (Sita).
PRICE (Dollars)
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0
Hun
S +T
S₁ +T
S
S
+
0 3 6
A
Scenario
Free trade
With tariff
With customs union
m
SHu
12 15 18 21 24 27 30
GRAIN (Thousands of bushels)
Calculate the quantity of bushels Hungary imports when the three nations engage in free trade. Enter this value in the first row of the following table.
Also indicate which country Hungary imports from.
?
Imports
(Thousands of bushels) Imports from...
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Transcribed Image Text:Consider a hypothetical world consisting of only three countries: Hungary, Australia, and Italy. Each country produces grain. Hungary is a small economy compared to Australia and Italy and thus cannot influence foreign prices. On the following graph, the supply and demand schedules of Hungary are shown as Sun and Dun. Foreign supply schedules of grain are perfectly elastic: Australia is a more efficient supplier of grain than Italy because its supply price is $1.00 per bushel (SAus), whereas Italy's supply price is $2.00 per bushel (Sita). PRICE (Dollars) 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0 Hun S +T S₁ +T S S + 0 3 6 A Scenario Free trade With tariff With customs union m SHu 12 15 18 21 24 27 30 GRAIN (Thousands of bushels) Calculate the quantity of bushels Hungary imports when the three nations engage in free trade. Enter this value in the first row of the following table. Also indicate which country Hungary imports from. ? Imports (Thousands of bushels) Imports from...
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