Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 7, Problem 11SPA
(a)
To determine
What does the news implies about the
(b)
To determine
Could product quality be a valid argument against free trade and state its reason.
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Sujee
International Trade - End of Chapter Problem
The United States is the fifth largest sugar consumer and the fifth largest sugar producer in the world. The U.S. sugar industry
has enjoyed trade protection since 1789 when Congress enacted the first tariff against foreign-produced sugar.
The accompanying graph depicts the supply and demand for sugar in the United States in 2019. The world price for sugar was
$0.12 per pound.
a. The United States enacts an import tariff of 6 cents per pound. In the accompanying graph, place the line labeled "World price
+ tarill" in the graph to reflect this tariff.
Price (cesta per pound)
52
54
48
24
18
D
0
B
Market for sugar
Domestic supply
19
24
Quantity (billions of pounds)
CS
d. Given the tarill, quantity demanded will be
pounds. U.S. imports will therefore be
PS
e. As a result of the tariff, consumer surplus will
economic surplus will
GR
World Price + tarif
b. Next, using the shapes in the graph, shade the areas that represent consumer surplus…
Suppose that the world price of oil is roughly
$90.00 per barrel and that the world demand and
total world supply of oil equal 34 billion barrels per
year (bb/yr), with a competitive supply of 20 bb/yr
and 14 bb/yr from OPEC. Statistical studies have
shown that the long-run price elasticity of
demand for oil is -0.40, and the long-run
competitive price elasticity of supply is 0.40.
Using this information, derive linear demand and
competitive supply curves for oil.
Let the demand curve be of the general form
Q=a-bP
and the competitive supply curve be of the
general form
Q=c+dP,
where a, b, c, and d are constants.
The equation for the long-run demand curve is
A.Q=47.50-0.15P.
B.Q=13.50-47.50P.
C.Q=47.50-P.
D.Q=47.50+0.15P.
E.Q=13.50-0.15P.
part a
The effect of a tariff on the quantity demanded of an imported commodity:
a will be higher the greater the elasticity of its demand.
b will be lower the greater the elasticity of its demand.
c does not depend on its elasticity of demand.
d will only depend on its elasticity of supply.
part b:
In a market supplied by both domestic and foreign producers the government establishes a quota on imports at a level below current imports. The quantity sold by domestic producers will ______________ and the equilibrium quantity in the market overall will ______________.
a not change; not change
b increase; decrease
c decrease; decrease
d decrease; not change
Part C: The picture attached
Chapter 7 Solutions
Macroeconomics
Ch. 7.1 - Prob. 1RQCh. 7.1 - Prob. 2RQCh. 7.2 - Prob. 1RQCh. 7.2 - Prob. 2RQCh. 7.2 - Prob. 3RQCh. 7.3 - Prob. 1RQCh. 7.3 - Prob. 2RQCh. 7.3 - Prob. 3RQCh. 7.3 - Prob. 4RQCh. 7.3 - Prob. 5RQ
Ch. 7.4 - Prob. 1RQCh. 7.4 - Prob. 2RQCh. 7.4 - Prob. 3RQCh. 7.4 - Prob. 4RQCh. 7.4 - Prob. 5RQCh. 7 - Prob. 1SPACh. 7 - Prob. 2SPACh. 7 - Prob. 3SPACh. 7 - Prob. 4SPACh. 7 - Prob. 5SPACh. 7 - Prob. 6SPACh. 7 - Prob. 7SPACh. 7 - Prob. 8SPACh. 7 - Prob. 9SPACh. 7 - Prob. 10SPACh. 7 - Prob. 11SPACh. 7 - Prob. 12APACh. 7 - Prob. 13APACh. 7 - Prob. 14APACh. 7 - Prob. 15APACh. 7 - Prob. 16APACh. 7 - Prob. 17APACh. 7 - Prob. 18APACh. 7 - Prob. 19APACh. 7 - Prob. 20APACh. 7 - Prob. 21APACh. 7 - Prob. 22APACh. 7 - Prob. 23APACh. 7 - Prob. 24APACh. 7 - Prob. 25APACh. 7 - Prob. 26APACh. 7 - Prob. 27APACh. 7 - Prob. 28APA
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