Macroeconomics (7th Edition)
7th Edition
ISBN: 9780134738314
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 7, Problem 7.4.12PA
(a):
To determine
Imposition of tariff.
(b):
To determine
Imposition of quota.
(c):
To determine
Preferences: tariff or quota.
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[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.]
[Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences.
2. [ Suppose India decides to remove the tariff, show the effect of this change on India’s imports on the graph. Clearly label the new domestic quantity demanded and the quantity supplied. You must use the same graph as you have drawn in answer to Part a to show this new scenario. How does this policy affect consumers, producers, and the government in India? You only have to state who benefits or harms from the policy.
3. [Label the areas in your graph and fill in the following table.
With Tariff
Free Trade (after the tariff is removed)
Consumer Surplus
Producer Surplus
Government…
ALL QUESTIONS APPLY TO GRAPH
28. Suppose IP is the international trade price and this country's government imposes a $3 tariff on imports of this good, what will be the net loss to this economy?
29. Suppose IP is the international trade price and this country's government imposes a $3 tariff on imports of this good, how much revenue will the government collect?
30. Suppose IP is the international trade price and this country's government imposes a 6 unit quota on imports of this good, what will be the net loss to this economY?
Because Zambia participates in international trade in the market for soybeans, it will import
tons of soybeans.
Now suppose the Zambian government decides to impose a tariff of $10 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes
, and Zambia will import
tons of soybeans.
Use the following graph to show the effects of the $10 tariff
Chapter 7 Solutions
Macroeconomics (7th Edition)
Ch. 7 - Prob. 7.1.1RQCh. 7 - Prob. 7.1.2RQCh. 7 - Prob. 7.1.3PACh. 7 - Prob. 7.1.4PACh. 7 - Prob. 7.1.5PACh. 7 - Prob. 7.2.1RQCh. 7 - Prob. 7.2.2RQCh. 7 - Prob. 7.2.3PACh. 7 - Prob. 7.2.4PACh. 7 - Prob. 7.2.5PA
Ch. 7 - Prob. 7.2.6PACh. 7 - Prob. 7.2.7PACh. 7 - Prob. 7.2.8PACh. 7 - Prob. 7.2.9PACh. 7 - Prob. 7.3.1RQCh. 7 - Prob. 7.3.2RQCh. 7 - Prob. 7.3.3RQCh. 7 - Prob. 7.3.4RQCh. 7 - Prob. 7.3.5PACh. 7 - Prob. 7.3.6PACh. 7 - Prob. 7.3.7PACh. 7 - Prob. 7.3.8PACh. 7 - Prob. 7.3.9PACh. 7 - Prob. 7.3.10PACh. 7 - Prob. 7.3.11PACh. 7 - Prob. 7.3.12PACh. 7 - Prob. 7.3.13PACh. 7 - Prob. 7.4.1RQCh. 7 - Prob. 7.4.2RQCh. 7 - Prob. 7.4.3PACh. 7 - Prob. 7.4.4PACh. 7 - Prob. 7.4.5PACh. 7 - Prob. 7.4.6PACh. 7 - Prob. 7.4.7PACh. 7 - Prob. 7.4.8PACh. 7 - Prob. 7.4.9PACh. 7 - Prob. 7.4.10PACh. 7 - Prob. 7.4.11PACh. 7 - Prob. 7.4.12PACh. 7 - Prob. 7.4.13PACh. 7 - Prob. 7.4.14PACh. 7 - Prob. 7.5.1RQCh. 7 - Prob. 7.5.2RQCh. 7 - Prob. 7.5.3RQCh. 7 - Prob. 7.5.4PACh. 7 - Prob. 7.5.5PACh. 7 - Prob. 7.5.6PACh. 7 - Prob. 7.5.7PACh. 7 - Prob. 7.5.8PACh. 7 - Prob. 7.5.9PACh. 7 - Prob. 7.5.10PACh. 7 - Prob. 7.1CTECh. 7 - Prob. 7.2CTECh. 7 - Prob. 7.3CTE
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- Now suppose the Zambian government decides to impose a tariff of $60 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes S tons of soybeans. and Zambia will import Use the following graph to show the effects of the $60 tariff. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff. PRICE (Dollars perton) 490 460 430 400 370 340 310 280 250 220 190 0 Domestic Demand Domestic Supply 20 40 60 80 100 120 140 QUANTITY (Tons of soybeans) P W 160 180 200 World Price Plus Tariff CS PS Government…arrow_forwardSuppose the nation of Isoland is an importer of textiles and is looking for a way to raise government revenue. The following graph shows the effect of a tariff on textile imports. Price of Textiles с G 1 B Supply P+T D E F Demand PW I Q "S,1 $2 Quantity of Textiles Having rejected a tariff on textiles (a tax on imports), the president of Isoland is now considering the same-sized tax on textile consumption (including both imported and domestically produced textiles). Under a textile consumption tax, the quantity of textiles consumed in Isoland is and the quantity produced in Isoland is The following table shows the effect of an import tariff on the nation of Isoland. Complete the remaining columns of the following table by indicating the effect of the same-sized tax on textile consumption. Under Tariff Before Tariff or Tax After Consumer Surplus Producer Surplus Government Revenue None Total Surplus A+B+C+D+E+F G A+B Change -(C+D+E+F) Under Consumption Tax After Change C+G +C E +E…arrow_forwardOn the following graph, use the green point (triangle symbol) to shade consumer surplus in Germany after China's clothing industry expands. Then use the purple point (diamond symbol) to shade producer surplus. When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing. Suppose the following graph represents the market for clothing in Germany prior to the expansion of China's clothing industry. Germany is an(IMPORT OR EXPORT) of clothing because the world price is(ABOVE OR BELOW) the domestic equilibrium price.arrow_forward
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