Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 13, Problem 1.3CE
To determine
To describe:
The category of cost must be covered by the early penetration prices
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Steel is produced only in the US and the rest of the world (ROW). The inverse demand and supply in the US are
p = 110 - Q8 and p = 20 + Qỗ,
while in the ROW, they are
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All quantities are in millions of tons and all prices are in dollars per ton. Since steel is produced more cheaply in the ROW, the US imports it from the ROW under international trade. At
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QM = Q% - Qi. Similarly, the exports of the ROw, QF, is the excess supply of steel given by the difference between how much they produce and how much they demand:
QE = Qk - Qg.
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consumer surplus $
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producer surplus
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The following graph shows the domestic demand for and supply of limes in Bangladesh. The world price (Pw) of limes is $800 per ton and is displayed
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country does not affect the world price of limes and that there are no transportation or transaction costs associated with international trade in limes.
Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.
PRICE (Dollars per ton)
PRICE (Dollars per ton)
1120
1080
1040
1000
960
9:20
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640
800
760
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760
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0
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Domestic Demand
10
I
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T
I
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Domestic Supply
70
60
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30 40
QUANTITY (Tons of limes).
30 40 50 60 70
QUANTITY (Tons of limes)
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A tariff set at this level would raise $
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If Bangladesh is open to international trade in limes without any restrictions, it will…
The following graph shows the domestic demand for and supply of lemons in Panama. The world price (Pw) of lemons is $245 per ton and is displayed
as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one
country does not affect the world price of lemons and that there are no transportation or transaction costs associated with international trade in
lemons. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.
PRICE (Dollars per ton)
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365
345
325
305
285
265
245
225
205
Domestic Demand
0 50 100
Domestic Supply
PW
150 200 250 300 350 400 450 500
QUANTITY (Tons of lemons)
If Panama is open to international trade in lemons without any restrictions, it will import
tons of lemons.
Chapter 13 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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