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 =
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- Home's demand curve for wheat is P = 10 - (1/20)Qd. Its supply curve is P = 4 + (1/20)Qs Eoreign'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 AW = APS + ACS + AGR =Country C imports 80,000 metric tons of steel from Country U and produces domestically80,000 metric tons per year. The world price of steel is $500 per metric ton. Assuming linearschedules, research analysts estimated the price elasticity of domestic supply to be 0.50 and theprice elasticity of domestic demand to be -0.25 in the current market equilibrium. Country Cimposes an import duty of $150 per metric ton that caused the world price to fall by 10%. What are the terms of trade of the Country C steel market after the tariff was imposed? Explain the welfare effects of both countriesIn the world market, a pair of shoes from China is sold for $40 and that from Mexico is $50. U.S. made shoes are $70 a pair. Initially U.S. does not belong to any free trade agreement and imposes an ad valorem tariff of 30%. Later, the U.S. joins a free trade agreement with Mexico and remove all trade barriers including tariffs. The import demand function for the U.S. is Q = 280 – 4P. (Hint: Draw the import demand curve of the world market as shown in the examples on the textbook and lecture slides.) 13. How much will the U.S. government tariff revenue change (as a result of this free trade agreement? а. Increase by $144 O b. Decrease by $720 C. Decrease by $800 O d. Decrease by $864
- b. 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?Consider a small (home) country with the following inverse demand of: P = 200 − 3QD and inverse supplyof: P = 20 + QS for a barrel of oil. The world demand is perfectly horizontal with a price of: P^X = 100.Solve the following for the home country:A) Calculate the equilibrium price and quantityB) Calculate the consumer surplus, producer surplus (note the shape), and total surplusNow, suppose the home country opens up to free trade.C) Calculate the quantity supplied, quantity demanded, export quantity, and priceD) Calculate the consumer surplus, producer surplus, and total surplusNow, suppose the home country is open to free trade and provides an export subsidy of $15 per barrel of oil.E) Calculate the equilibrium price and quantityF) Calculate the consumer surplus, producer surplus, tax revenue, and total surplusG) Explain how the three outcomes: no trade, free trade, and trade with an export tariff, affect the homecountry (consumers, producers, and overall welfare)H) What changes if…Why does the efficiency of an import tariff depend on the price elasticity of demand?
- On the following graph, the supply and demand schedules of Liechtenstein are shown as SLch and DLeh. Foreign supply schedules of grain are perfectly elastic: Canada is a more efficient supplier of grain than France because its supply price is $0.80 per bushel (Scan), whereas France's supply price is $1.60 per bushel (Sp). (? 8.00 Lch S. Lah 7.20 6.40 5.60 4.80 4.00 3.20 Scan +T 2.40 A 1.60 0.80 4 12 20 24 28 32 36 40 PRICE (Dollars)The following graph shows intra-industry trade in the United States for two types of yogurts: Yoplait (a famous French brand) and Dannon (a famoud American brand): -1 13 12 11 10 A 9 8G 7 2 Price 1. 0 0 2 US Market for Yoplait (Y) Supply of Yoplait 5 6 7 Loss of LQM. Gain of LQM. Loss of KLMR. Demand for Yoplait Gain of KLMR. Yoplak 9 10 11 12 13 14 12 Price 11 10 A US Market for Dannon (D) 2 3 4 5 7 Supply of Dannon Refer to the above graph. At the price of $6 for D, intra-industry trade leads to which of the following for the United States: 8 Demand for Dannon Dannon 9 10 11 12 13Given the supply - demand function of printers in Vietnam as follows:Sx = -20000 + 250PDx = 160000-350PKnowing that Vietnam is considered a small country, the price of a printer on the world market is $120/piece.a. If the Government of Vietnam levies an import tax of 25% on this item, calculate the loss to domestic consumers. How much is the import tax revenue from the Vietnamese government's printer products in this case?b. Due to the commitment to integration, the Government of Vietnam applies an import tax rate of 12.5% for printers, calculate the change in the import tax revenue of the Government of Vietnam.c. To ensure that there are no more imports, what is the minimum tax rate that the Vietnamese government should set?
- 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 151. 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. a. If there is no tariff, how much do consumers pay for a pound of coffee? What is the quantity demanded? b. If the tariff is imposed, how much will consumers pay for a pound of coffee? What is the quantity demanded? c. Calculate the lost consumer surplus. d. Calculate the tax revenue collected by the government. e. Does the tariff result in a net gain or a net loss to society as a whole?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…