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 7.4.9PA
Subpart (a):
To determine
Economic effect of reduction on tariff.
Subpart (b):
To determine
Subpart (c):
To determine
Economic effect of reduction on tariff.
Subpart (d):
To determine
Economic effect of reduction on tariff.
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Students have asked these similar questions
Economics
When a new tariff is placed on imported furniture,
which of the following is expected to happen in
the domestic market for furniture, all else being
equal?
a.Consumer surplus and producer surplus both
increase.
b.Consumer surplus decreases and producer
surplus increases.
c.Consumer surplus and producer surplus both
decrease.
d.Consumer surplus increases and producer
surplus decreases.
Refer to the graph below of a large country that has imposed a
tarifft on this good. The terms-of-trade gain for this country is
, and the deadweight loss suffered by this country is
Price
$36
$30
$26
Home market
S
D
20 40 80 100 Quantity
Price
World market
40 80
Imports
Assume that you are consulting with a small country that imposes a tariff on a product that it produces. Ask the decision makers of the country to identify the incorrect statement from the ones below:
They will have a consumer surplus decline.
They will have a decline in producer
They will have a decline of the quantity
Their total fall in surplus will be more than their deadweight loss.
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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Similar questions
- The figure below illustrates the impact of an export subsidy as imposed by a large country. No imports are permitted. Price D D₁ Da Domestic price with subsidy World price World price with subsidy Quantity What is the net impact on the producer surplus of the export subsidy provided by the domestic government? The producer surplus increases by area (a+b+c+d).. The producer surplus falls by area (a + b). The producer surplus falls by area (a + b +c+e+f+g+h). The producer surplus increases by area (a + b + c).arrow_forwardPrice per Saddle Domeslic Supply A P2 Tariff World Price E P1 G 3D Domestic Demand 3D Q1 Q2 Q3 QA Quantity of Saddles What is the new amount of Producer Surplus gained as a result of the tariff? OA + B O G+ C OG +C - D Ocarrow_forward1. Your textbook discusses the benefits of cheaper imports on pages 171-173. Draw a graph that shows the effects on consumer and producer surplus (gain or loss) that result from a country importing a good. 2. Recently, China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 115 – 1/15Q Supply: P = 55 + 1/15Q Where P is Yuan per bushel of soybeans and Q is 10 million bushels per year. The world price for soybeans is ¥65/bushel. Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including the Domestic Demand curve, Domestic Supply curve, the World Price, and the Price with tariffs. 3. How many bushels of soybeans can the US export to China if there are no tariffs? How many bushels with the imposed tariff? 4. Who are the greatest benefactors of China’s…arrow_forward
- 8. Which of the following would be a deadweight loss from a tariff? A) The shift of consumer surplus to government B) The increase in producer surplus c) The decrease in consumer surplus D) The decrease in consumer surplus due to a drop in consumption 3|Page 9. Use the graph below and the following information to answer the next question. The world price of soybeans is $2.00 per bushel, and the importing country is small enough not to affect the world price. 2.25 2.00 World price 60 70 130 140 Qimillions bushels Based on Figure above, suppose the government puts a tariff of $0.25 per bushel on soybean imports. How much will the tariff reduce imports? A) Imports will decrease by 10 million bushels. B) Imports will decrease by 20 million bushels. C) Imports will decrease by 60 million bushels. D) Imports will not change after the tariff.arrow_forwardVietnam 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?arrow_forwardSuppose the United States producers of rice convince the government to place a quota on (or to restrict entirely) the import. a. What is the effect on U.S. producers of rice? b. What is the effect on U.S. consumers of rice? c. What is the effect on the foreign producers of rice?arrow_forward
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