In a single year, Germany can raise 100 tons of wheat or produce 1,000 boxes of daisies. In the same growing season, France can raise 50 tons of wheat or produce 750 boxes of daisies. When the two countries begin trading wheat for daisies, the total surplus from wheat consumption and production can be expected to: fall in Germany. rise in Germany. stay the same in France. either rise or fall in France.

Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and Dk is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 120,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 120,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 40 80 120 160 200 SK 240 10 0² W 280 320 360 400 SK+Q Price with Quota A Change in PS Quota Rents DWL ?

The market for pencils has a domestic demand equation P=20−0.5Q�=20−0.5�, and a domestic supply equation  P=5+Q�=5+�, where quantity is measured in thousands. The world supply equation for pencils is PW=10��=10.  The domestic government decides to implement a tariff of $10 per thousand pencils. As a result of the tariff, the new domestic price of pencils is

Euros per U.S. dollar X2 Supply of U.S. dollars E2 X₁ E₁ D₁ D2 Quantity of U.S. dollars Explain the shift from D1 to D2. 0 What might have caused the shift from D1 to D2? I