Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 7, Problem 24APA
To determine
What happens to the price for beef, quantity of beef produced in US and the US and Australian gains from the trade when there is a quota.
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Figure 7-2
Price
(dollars
per pound)
$3.00
2.50
1.75
0.50
12 18 26 38 45
U.S. Supply
U.S. Demand
Quantity of coffee
(millions of pounds)
Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 7-2 shows the impact of this tariff.
Refer to Figure 7-2. Without the tariff in place, the United States consumes
12 million pounds of coffee.
Pw+tariff
World price (P
26 million pounds of coffee.
33 million pounds of coffee.
45 million pounds of coffee.
Vietnam has a policy of free trade in motorcycles which are sold in world markets at a price of 10,000 per motorcycle.
Under free trade, Vietnam produces 100,000 motorcycles and imports 100,000 motorcycles. To provide some protection
to the domestic industry, Vietnam imposes an import tariff of $1500 per motorcycle. With this tariff in place, production
in Vietnam rises by 5,000 motorcycles and consumption drops by the same amount. Calculate the effects of the tariff on:
a. Consumer Surplus b. Producer Surplus c. Government Revenues d. Overall Welfare e. If the tariff imposed by the
Vietnamese had led to small reduction in world prices of, say, 250 dollars, how, qualitatively, would the welfare
calculations (a), (b), (c) and (d) above change?
Price
10
Price at which good sells = 7.25
Price at which good sells = 6
Marginal cost of producing
amount traded = 4
Marginal cost of producing
amount traded = 2.75
Price
Price
gap=t gap=t
4,000 6,000
Quantity
Figure 18.3 The market for cars: Price gaps reflect trade costs.
The exporter's
supply curve
The consumer's
demand curve
15,000
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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