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- Suppose a big country with a good's demand described by P = 96 - 4Q and a good's supply described by P = 24 + 2Q implements a $12 tariff, which ultimately decreases the world price from $32 to $28. (a) Calculate the total surplus under each scenario: no trade, free trade, and protected trade. (b) Calculate the terms-of-trade gain that is created by the tariff. (c) Calculate the total surplus if this is a small country instead of a big country under the same market and tariff as above (government charging the same amount per unit imported).A big country with a good's demand described by P = 150 - 3Q and a good's supply described by P = 40 + 2Q implements a $8 tariff, which ultimately decreases the world price from $66 to $64. (a) Calculate the total surplus under each scenario: no trade, free trade, and protected trade. (b) Calculate the distortion loss that is created by the tariff. (c) Suppose the tariff led to an increase in the current account, while primary budget deficit and private saving both increased as well. What happened to the economy's investment?5) Suppose Türkiye has raised taxes on avocados imported from Mexico. These taxes are an example of a(n) A) tariff. B) import quota. C) local content requirement. D) subsidy.
- Consider a large country with a domestic demand characterized by the inverse demand function P=1000-Q. Domestic supply is represented by the equation P=400+Q. Finally, the world price of the good is 900. You know that an export tariff pass-through is 10%, meaning that foreign price decreases by 10% value of an export tariff t; more generally, 10% of any change in the domestic price is absorbed by the world market. a) Draw a diagram of a free trade case, label imports, consumer and producer surplus. b) Now you want to introduce export quota restrictions q. Calculate the value of the optimal export quota q, which maximizes domestic welfare. Illustrate CS, PS, QR, and DWL on your graph. Calculate their numerical values. c) Would you prefer to use an export quota or an export tariff? Explain why. Why do we see both instruments of trade policy being used? What are the advantages and disadvantages of export quotas compared to export tariffs?Consider a large country with a domestic demand characterized by the inverse demand function P=1000-Q. Domestic supply is represented by the equation P=400+Q. Finally, the world price of the good is 900. You know that an export tariff pass-through is 10%, meaning that foreign price decreases by 10% value of an export tariff t; more generally, 10% of any change in the domestic price is absorbed by the world market. a) Draw a diagram of a free trade case, label imports, consumer and producer surplus. b) Now you want to introduce export quota restrictions g. Calculate the value of the optimal export quota q, which maximizes domestic welfare. Illustrate CS, PS, QR, and DWL on your graph. Calculate their numerical values.The aim of a tariff is to: (a) maximise total surplus. (b) protect domestic consumers. (c) protect domestic producers. (d) create deadweight loss.
- 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…Question 3 a) With aid of a diagram, explain the general equilibrium framework of the Hecksher Ohlin(H-O) model. b) Draw a figure showing the consumption, production, trade, revenue and redistribution effects of an import tariff when the nation is assumed to be too small to affect world prices. What is the protection cost of the tariff?PROBLEM (6) (Optimal tariff setting without the small country assumption) US demand and supply for wheat are Q = 120-p and Q = p respectively. The rest of the world ROW demand and supply for wheat are Q = 240 - 4p and Q = 2p respectively. Suppose the US is imposing $t (per unit) tariff for imports from the rest of the world. What should the tarifft be, in order to maximize Tariff Revenues?
- What is the tariff rate (in cents per kg) charged by U.S. on live buffalo originating in each of the following countries upon importation of the live buffalo into the United States? For purposes of this question, assume (i) that the live buffalo are normal bovine animals and are neither purebred animals being imported for breeding purposes nor are they part of (or being imported to be part of) a travelling circus or travelling menagerie and (ii) no sanction, quota, embargo or similar restriction bars the importation. Country of Origin Japan South Korea Australia North Korea Tariff rate (duty) (cents per kg)Home's Domestic Demand and supply curves for shoes are D = 500-10P and S = 300+20P. Foreign's domestic demand and supply curves for the same type of shoes are D = 1000-10P and S = 200 + 40P. (a) Find the autarky price and quantity for each country. If the countries trade, which country will export shoes? (b) Derive algebraically the import demand and export supply functions. Find the price and volume of trade with free trade.Topic 3 Assignment The following graph shows the domestic supply of and demand for maize in Bangladesh. Bangladesh is open to international trade of maize without any restrictions. The world price (Pw) of maize is $245 per ton and is represented by the horizontal black line. Throughout this problem, 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. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 470 Supply 420 305 X I I Demand I PRICE (Dollars perton) 445 245 720 D P W 40 80 120 150 200 240 280 320 350…