Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 22, Problem 10DQ
To determine
The impact of agricultural subsidies on domestic and world agricultural prices and an international allocation of agricultural resources.
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Question 3
Table: U.S. Demand for and Supply of Widgets
Price
$1
Quantity 5
Supplied
Quantity
Demanded
20
O 0 widgets
2 widgets
O4 widgets
6 widgets
$2
6
19
$3
7
18
$4
8
17
$5
9
15
$6
10
14
$7
11
13
$8 $9
12 13
12
11
$10
14
10
The United States can import widgets from China at $4 each and from Mexico at $5 each. The United States
imposes a tariff of $2 on each of its widget imports. Suppose that the United States and Mexico form a free-
trade area. How much trade in widgets is diverted in the U.S.-Mexican free-trade area?
Please examine the market for AC units below. In this market, the Home nation has
imposed a quota limiting the number of AC units that foreign nations are allowed to
export into the Home economy. Based on this diagram, what was the level of that
quota?
Price
$12
$11
$10
59
50
$7
56
55
$4
53
52
51
0
Home Market for AC Units
123
O 3 units
Quantity
IS 5+Q
XX
4 or more units
Pw
O 1 unit
O2 units Consumer Surplus Producer Surplus
Consumer Surplus
Producer Surplus
Price
$12
$11
$10
$9
S8
$7
$6
$5
$4
$3
$2
$1
0
International Market for AC Units
1
C
Se
2 3 4 5 6 7 8 9 10
Quantity
Question 3
Demand in a domestic market is represented by the curve P = 200 - Q Supply is represented by P = 20 + 0.5Q. The world price is 120. If this country opens the market to what will the gains from trade be?
O $600
O 33.600
O $2.400
O $1,200
Chapter 22 Solutions
Microeconomics
Ch. 22 - Prob. 1DQCh. 22 - Prob. 2DQCh. 22 - Prob. 3DQCh. 22 - Prob. 4DQCh. 22 - Prob. 5DQCh. 22 - Prob. 6DQCh. 22 - Prob. 7DQCh. 22 - Prob. 8DQCh. 22 - Prob. 9DQCh. 22 - Prob. 10DQ
Ch. 22 - Prob. 11DQCh. 22 - Prob. 12DQCh. 22 - Prob. 13DQCh. 22 - Prob. 14DQCh. 22 - Prob. 1RQCh. 22 - Prob. 2RQCh. 22 - Prob. 3RQCh. 22 - Prob. 4RQCh. 22 - Prob. 5RQCh. 22 - Suppose that corn currently costs 4 per bushel and...Ch. 22 - Suppose chat both wheat and corn have an income...Ch. 22 - Prob. 3PCh. 22 - Prob. 4P
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- Based on Figure 48, choose the correct statement. Assume that Nation 2 imposes a quota (30X) on imports of X (an agricultural commodity). Figure 48 Partial equilibrium effects of an import quota Py (S) 25 10 20 25 30 40 50 55 60 65 70 O 1) Given the increase in demand from Dx to D'x, the price of X increases to $2.5, and the quota is 20X. 2) Given the increase in demand from Dx to D'x, the price of X increases to $2.5, and the quota is 55X. 3) Given the increase in demand from Dx to D'x, the price of X increases to $2, and the quota is the same. O 4) Given the increase in demand from Dx to D'x, the price of X increases to $2.5, and the quota is the same.arrow_forwardQuestion 9 The figure below represents the domestic market for wheat in a small country. Imports of wheat are prohibited. Price ($ per bushel) $180 $160 0 40 60 O $600 million. $2.2 billion. O $3 billion. 120 O $1.2 billion. 150 Sa (domestic supply curve) With an export subsidy of $20 per bushel, the cost to the government of paying the export subsidy is World price Da (domestic demand curve) Quantity (millions of bushels)arrow_forwardDemand in a domestic market is represented by the curve P = 200 - Q. Supply is represented by P = 20 + 0.5Q. The world price is 120. If this country opens the market to what will the gains from trade be? O $3,600 O $600 $2,400 O $1,200arrow_forward
- Consider the market for surfboards in the graph with a $100 tariff per imported surfboard. If the government wanted to impose an equivalent quota, the quota would need to be set at Price (S) 800 500 400 300 0 O 40 O 70 O 30 60 20 30 50 Price with tariff 70 S 80 Price with free trade D Next >arrow_forwardSuppose that the world price of oil is $70 per barrel and that the United States can buy all the oil it wants at this price. Suppose also that the demand and supply schedules for oil in the United Sta follows: Price ($ per Barrel) 55 60 65 70 75 U.S. Quantity Demanded 26 24 22 20 18 U.S. Quantity Supplied 14 16 18 20 22 Now suppose that the United States allows no oil imports. The equilibrium price in the United states is $ 70 per barrel and the equilibrium quantity is 20 million barrels. If the United States imposed a price ceiling of $65 per barrel on the oil market and prohibited imports, there would be an of million barrels of oil. excess supply excess demandarrow_forwardThe hypothetical country of Crabby Island has imposed a production quota of 4,000 crabs per month. Use the line segment in the graph below to show this production quota then answer the following question. Price ($) 10 9 8 7 (O 5 4 3 2 1 2000 Production quota 4000 6000 Quantity (crabs per month) Supply Demand 8000 10000 1. Use the line segment to show a production quota of 4,000 crabs per month. 2. What is the price of crab after the introduction of the quota? GA Numberarrow_forward
- -2 The graph below shows the rice market in Hatha. Price 10 6 8 7 6 LO 3 2 1 200 400 600 800 Quantity of kilos per month 1000 S D Earrow_forward. During the 1980s most of the global supply of lysine was produced by a Japanese company named Anjinomoto. Lysine is an essential amino acid that is an important livestock feed component. At this time, the US imported most of this global supply of lysine (more than 30,000 tons) to use in livestock feed at a price of $1.65 per pound. The global market for lysine, however, fundamentally changed in 1991 when US-based Archer Daniels Midland (ADM) began producing lysine; a move that doubled worldwide production capacity. Experts conjectured that the marginal cost of producing lysine was approximately $0.70 per pound. Despite ADM's entry into the lysine market, suppose demand remained constant at Q = 208 – 80P (in millions of pounds). Shortly after ADM began producing lysine, the worldwide price dropped to $0.70. By 1993, however, the price of lysine shot back up to $1.65. Give a plausible explanation for what might have happened in the lysine market. Support your answer with appropriate…arrow_forwardWhich of the following results from a subsidy? Select one: O a. world output is increased O b. exports increase O c domestic production costs increase © d. imports increasearrow_forward
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