Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 34, Problem 57P
The country of Pepperland exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table 34.6 and Table 34.7.
- What would be the
equilibrium price and quantity in each country in a world without trade? How can you tell? - What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell?
- Sketch two
supply and demand diagrams, one for each country, in the situation before trade. - On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade.
- If the Land of Submarines imposes an anti- dumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country.
- Does your general answer change if the Land of Submarines imposes an import quota of 70?
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If Bangladesh is open to international trade of wheat without any restrictions, it will import
the full value for your answer, accounting for the horizontal axis units.)
Suppose the Bangladeshi government wants to reduce imports to exactly 200,000 bushels of wheat to help domestic producers. A tariff of S
per bushel will achieve this.
A tariff set at this level would raise $
bushels of wheat. (Note: Be sure to enter
in revenue for the Bangladeshi government.
The following graph shows the domestic supply of and demand for maize in Bangladesh. The world price (Pw) of maize is $255 per ton and is
represented by the horizontal black line. Throughout the question, 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.
455
Domestic Demand
Domestic Supply
430
405
380
355
330
305
280
Pw
255
230
205
200
250
300
350
400
450
500
QUANTITY (Tons of maize)
If Bangladesh is open to international trade in maize without any restrictions, it will import
300 tons of maize.
Suppose the Bangladeshi government wants to reduce imports to exactly 100 tons of maize to help domestic producers. A tariff of $
per ton
will achieve this.
A tariff set at this level would raise $
in revenue for the…
The world price of wine is below the price that would prevail in Canada in the absence of trade. Assume that Canadian imports of wine are a small part of
total world wine production.
The following graph shows the Canadian market for wine under free trade.
Use the green triangle (triangle symbol) to shade consumer surplus when Canada is open to trade. Then use the purple triangle (diamond symbol) to
shade producer surplus in this case.
Price of Wine
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Quantity of Wine
Domestic Supply
World Price
Consumer Surplus
Producer Surplus
(?)
Chapter 34 Solutions
Principles of Economics 2e
Ch. 34 - Explain how a tariff reduction causes an Increase...Ch. 34 - Explain how a subsidy on agricultural goods like...Ch. 34 - Explain how trade barriers save jobs in protected...Ch. 34 - Explain how trade barriers raise wages in...Ch. 34 - How does international trade affect working...Ch. 34 - Do the jobs for workers in low-income countries...Ch. 34 - How do trade barriers affect the average Income...Ch. 34 - How does the cost of saving jobs in protected...Ch. 34 - Explain how predatory pricing could be a...Ch. 34 - Why do low-income countries like Brazil, Egypt, or...
Ch. 34 - Explain the logic behind the race to the bottom...Ch. 34 - What are the conditions under which a country may...Ch. 34 - Why is the national security argument not...Ch. 34 - Assume a perfectly competitive market and the...Ch. 34 - What is the difference between a free trade...Ch. 34 - Why would countries promote protectionist laws,...Ch. 34 - What might account for the dramatic increase in...Ch. 34 - How does competition, whether domestic or foreign,...Ch. 34 - What are the gains from competition?Ch. 34 - Who does protectionism protect? From what does it...Ch. 34 - Name and define three policy tools for enacting...Ch. 34 - How does protectionism affect the price of the...Ch. 34 - Does international trade, taken as a whole,...Ch. 34 - Is international trade likely to have roughly the...Ch. 34 - How is international trade, taken as a whole,...Ch. 34 - Is international trade likely to have about the...Ch. 34 - What are main reasons for protecting infant...Ch. 34 - What is dumping? Why does prohibiting it often...Ch. 34 - What is the race to the bottom scenario?Ch. 34 - Do the rules of international trade require that...Ch. 34 - What is the national interest argument for...Ch. 34 - Name several of the international treaties where...Ch. 34 - What is the general trend of trade barriers over...Ch. 34 - If opening up to free trade would benefit a...Ch. 34 - Who gains and who loses from trade?Ch. 34 - Why is trade a good thing if some people lose?Ch. 34 - What are some ways that governments can help...Ch. 34 - Show graphically that for any tariff, there is an...Ch. 34 - From the Work It Out Effects of Trade Barriers,...Ch. 34 - If trade barriers hurt the average worker in an...Ch. 34 - Why do you think labor standards and working...Ch. 34 - How would direct subsidies to key industries be...Ch. 34 - How can governments identify good candidates for...Ch. 34 - Microeconomic theory argues that it is...Ch. 34 - How do you think Americans would feel if other...Ch. 34 - Is it legitimate to impose higher safety standards...Ch. 34 - Why might the unsafe consumer products argument be...Ch. 34 - Why might a tax on domestic consumption of...Ch. 34 - Why do you think that the GAIT rounds and, more...Ch. 34 - An economic union requires giving up some...Ch. 34 - What are some examples of innovative products that...Ch. 34 - In principle, the benefits of international trade...Ch. 34 - Economists sometimes say that protectionism is the...Ch. 34 - Trade has income distribution effects. For...Ch. 34 - Assume two countries, Thailand (T) and Japan (J),...Ch. 34 - You have just been put in charge of trade policy...Ch. 34 - The country of Pepperland exports steel to the...
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