Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Chapter 35, Problem 10E
To determine
To explain:
The impact on the
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Georgia and Moldova are famous for their quality of wine and the United Kingdom decides to
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Suppose the UK joins a trade bloc with Moldova and maintains its 5£ tariff on wine from
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The following graph shows the domestic supply of and demand for wheat in Bolivia. Bolivia is open to international trade of wheat without any
restrictions. The world price (Pw) of wheat is $260 per bushel 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 wheat and that there are no transportation or transaction costs associat
with international trade in wheat. 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.
Graph Input Tool
Market for Wheat in Bolivia
530
I Price
(Dollars per bushal)
500
Supply
470
470
Domestic Demand
(Thousands of…
The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $20 and the
equilibrium quantity is 3 million T-shirts. One day, after reading Adam Smith's The Wealth of Nations while on vacation, the
president decides to open the Textilian market to international trade. The market price of a T-shirt falls to the world price of
$16. The number of T-shirts consumed in Textilia rises to 4 million, while the number of T-shirts produced declines to 1
million. If the domestic demand curve and domestic supply are both linear, the resulting increase in the total surplus in the
Textilian T-shirt market is about
Zero dollars
$6 million
$14 million)
$4 million
$12 million
$8 million
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