P2. Suppose that in Japan, without a tariff 10,000 cars will be sold per year at an equilibrium price of $20,000. With a $5,000 tariff, supply decreases such that 8,000 cars are produced at $22,500 per car. 2. Why is the increase in price less than the tariff?
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P2. Suppose that in Japan, without a tariff 10,000 cars will be sold per year at an
2. Why is the increase in price less than the tariff?
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- The domestic demand (Qpp) for wheat in the United States is estimated to be QDD=1430-55P, where the quantity of wheat is measured in millions of bushels per year. Suppose China also demands U.S. wheat (Qpc) and that its demand is given by QDc=1920-60P. What is the total demand for U.S. wheat, assuming the only two sources of demand are domestic and Chinese? The total demand for U.S. wheat is OA. Qp =3350-115P for all P. O B. Q =3350-115P for P≤ $26 and Qp = 1920-60P for P> $26. OC. Q=1920-60P for all P. O D. Q =3350-115P for P ≤ $32 and Qp =1430-55P for P> $32 E. Q =3350-115P for P≤ $26 and Qp =1430-55P for P> $26.Suppose a decrease in the world demand for desktop computers causes the price of desktop computers to fall from $600 to $500. Before the fall in demand, Juna, a local computer dealer in Japan, used to produce 9,000 desktop computers and exported 50 percent of it to other countries every week. However, after the fall in demand, Juna reduced its production to 8,000 units and exports only 40 percent of its total output.a. What are the changes in the quantity sold to domestic consumersb. What are the changes in the consumer surplus?c. Sketch a diagram to illustrate the changes for Juna.Consider the markets for cell phones and landline telephone service in France. Presume that when the average income of residents of Lyon is 27,500€ per year, the quantity demanded of landline telephone service is 6,250 and the quantity demanded of an unlimited cell phone is 14,000. When the price of unlimited mobile service increases from 50€ to 60€ per month, the quantity demanded of landline service decreases to 5,500. Furthermore, presume that when the average income increases to 30,000€, the quantity demanded of unlimited mobile service increases to 16,500. a) According to the given information, what type of good is unlimited mobile telephone service? How do you know? Briefly explain.
- The demand for Australian-made motorcycles in Japan is given by: Japanese demand = 10000 –0.001(price of Australian motorcycles in yen). Similarly, the demand for Japanese-made motorcycles in Australia is: Australian demand = 30 000 –0.2(price of Japanese motorcycles in dollars). The domestic price of an Australian-made motorcycle is $20 000, and the domestic price of a Japanese-made motorcycle is ¥2 500 000. From the perspective of Australia, find the real exchange rate in terms of motorcycles and net exports of motorcycles to Japan, if: a) the nominal exchange rate is 100 yen per dollar b) the nominal exchange rate is 125 yen per dollar. c) How does an appreciation of the dollar affect Australian net exports of motorcycles (considering only the Japanese market)?A tariff has been placed on sisal, a plant that is used to produce sisal rugs. Wool rugs are a substitute in consumption for sisal rugs. If the price of wool rugs increases and the effect of this is greater on the demand for sisal rugs than the impact of the tariff on supply, what happens to the equilibrium price and quantity of sisal rugs? a. Price increases, and quantity decreases. b. Price decreases, and quantity increases. c. Price increases, and quantity increases. d. Price decreases, and quantity decreases.Much of the demand for U.S. agricultural output has come from other countries. In 1998, the total demand for wheat was Q = 3244 - 283P. Of this, total domestic demand was QD = 1700 - 107P, and domestic supply was QS =1944 + 207P. Suppose the export demand for wheat falls by 40%. a. U.S. farmers are concerned about this drop in export demand. What happens to the free-market price of wheat in the United States? Do farmers have much reason to worry? b. Now suppose the U.S. government wants to buy enough wheat to raise the price to $3.50 per bushel. With the drop in export demand, how much wheat would the government have to buy? How much would this cost the government?
- How did an export ban on onion by India affected the price of local onion in Bangladesh? Can you show this change/ effect on a diagram? If demand for local onion increases during Eid (in future) what changes do you see in the above diagram (from question 2)? Will the supply curve be affected or the demand curve for local onion? If less rainfall limited the supply of Indian onion production, how will it change the equilibrium price in the Indian market? If Indian Government reduces export incentive, how will it affect/change demand or supply of onion in India in the free market? Show with a diagram Onion prices in Bangladesh are unlikely to come down unless prices fall in India with a bumper production. What can we do to reduce the onion price in BD? Is there a role of the government?With the recent war between Russia and Ukraine, the production and thus exports of wheat have declined (which increased the price of such exports), because Ukraine is the major producer and exporter of the same. As a result, what can we expect in the market for rice, used by many as a staple instead of wheat? a) The equilibrium price will increase, the equilibrium quantity will decrease b) The equilibrium price will increase, the equilibrium quantity will increase c) The equilibrium price will decrease, the equilibrium quantity will increase d) The equilibrium price will decrease, the equilibrium quantity will decrease“Both the import demand curve and export supply curve of a good are functions of domestic price of the good.” Explain the above statement with the help of graphs.
- The major BP oil spill in the Gulf of Mexico substantially reduced the harvest of shrimp and other seafood in the Gulf, but had limited impact on the prices that U.S. consumers paid in 2010 (Emmeline Zhao, “Impact on Seafood Prices Is Limited,", Wall Street Journal, June 20, 2010). The reason was that the United States imports about 83% of its seafood and only 2% of domestic supplies come from the Gulf. Use a supply-and-demand diagram to illustrate what happened.IBM sold its personal computer (PC) and laptop business to Leonova (a Chinese company). HP and Compaq merged into one company. Dell is having trouble keeping its sales volume growing. These are indications that the supply of PCs produced by US companies should eventually ______________. >>>Is it decrease? Due to more Chinese computers?Suppose the Canadian demand for and the Japanese supply of cars to Canada is shown in the table below (quantities in thousands). Quantity Supplied (before tariff) Quantity supplied (after tariff) Price ($) 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 Quantity Demanded 170 150 130 110 90 70 50 30 50 70 90 110 130 150 170 190 a) The present equilibrium price is $ and quantity is b) Suppose that the Canadian government imposes a $2,000 per car tariff on imported Japanese cars. Show the new supply in the last column above. thousand. thousand. c) The new equilibrium price is $ and quantity is d) The total revenue received by the government will be $ e) Assume, instead, that the government imposes an import quota of 90,000 cars. The new equilibrium price is $ quantity is thousand. f) Does the government now receive any revenue? No million. and
