Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 9, Problem 4IAPA
To determine
The impact of international trade over Brazil's quantity and price of sugar is to be determined.
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Suppose that there are only two countries (the
United States and Mexico) and only two goods (
Automobiles and Corn). In the U.S., it takes 120
labor hours to produce a car and 15 labor hours to
produce a bushel of corn. In Mexico, it takes 200
labor hours to produce a car and 30 labor hours to
produce a bushel of corn. Ignoring tariffs, taxes, the
repeal of USMCA, or the Border Wall, which
countries should be exporting which good?
7. A graphical comparison of tariffs and quotas
Borzia and Ardon are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of rugs to 20
million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $2,000. In Borzia, the government decides to
impose a tariff of $3,000 per rug; in Ardon, the government implements a quota of 20 million rugs.
Assume that Borzia and Ardon have identical domestic demand (Do) and supply (S) curves for rugs as shown on the following graph. Under these
conditions, the price of rugs is $5,000 per rug in each country.
PRICE (Dollars per rug)
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Do
D₁
X
0
P...
10
20
30
50 60 70 80
40
QUANTITY (Millions of rugs)
90
S
100
(?)
20. Assume that two countries (Home and Foreign) each produce two goods (wheat and rice) under
constant cost production. Home produces 3 tons of rice or 1 ton of wheat with a day of labour. Foreign
produces 2 tons of rice or 4 tons of wheat each day of labour. Without trade (in autarky), Home's daily
production is 60 tons of rice and 20 tons of wheat. At which international price will Home's gains from
trade be largest?
A. 3 tons of rice per ton of wheat
B. 2.5 tons of rice per ton of wheat
C. 2 tons of rice per ton of wheat
D. 1.5 ton of rice per ton of wheat
E. 1 ton of rice per ton of wheat
Chapter 9 Solutions
Foundations of Economics (8th Edition)
Ch. 9 - Prob. 1SPPACh. 9 - Prob. 2SPPACh. 9 - Prob. 3SPPACh. 9 - Prob. 4SPPACh. 9 - Prob. 5SPPACh. 9 - Prob. 6SPPACh. 9 - Prob. 7SPPACh. 9 - Prob. 8SPPACh. 9 - Prob. 9SPPACh. 9 - Prob. 10SPPA
Ch. 9 - Prob. 11SPPACh. 9 - Prob. 1IAPACh. 9 - Prob. 2IAPACh. 9 - Prob. 3IAPACh. 9 - Prob. 4IAPACh. 9 - Prob. 5IAPACh. 9 - Prob. 6IAPACh. 9 - Prob. 7IAPACh. 9 - Prob. 8IAPACh. 9 - Prob. 9IAPACh. 9 - Prob. 1MCQCh. 9 - Prob. 2MCQCh. 9 - Prob. 3MCQCh. 9 - Prob. 4MCQCh. 9 - Prob. 5MCQCh. 9 - Prob. 6MCQCh. 9 - Prob. 7MCQ
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- Many U.S. firms import products or parts from other countries indstead of producing them domestically. In fact, most iPhones are other smartphones are made not in the U.S. but in China. Many politicians, notably Presidents Trump and Biden, and commentators argue that the government should protect domestic jobs in this country by penalizing the practice of importing from other countries. How are Americans affected by this practice? Does this hurt Americans by international trade as they are consumers and ordinary resident in the U.S.?arrow_forward4. A graphical comparison of tariffs and quotas Aniva and Kartaly are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $3,000. In Aniva, the government decides to impose a tariff of $2,000 per television; in Kartaly, the government implements a quota of 20 million televisions. Assume that Aniva and Kartaly have identical domestic demand (Do) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $5,000 per television in each country. PRICE (Dollars per television) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 0 PW 10 Do D₁ ☆ ☆ ☆ 20 30 40 50 60 70 QUANTITY (Millions of televisions) 80 S 90 100 (?)arrow_forward4. A graphical comparison of tariffs and quotas Aniva and kartaly are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 40 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $2,000. In Aniva, the government decides to impose a tariff of $2,000 per television; in Kartaly, the government implements a quota of 40 million televisions. Assume that Aniva and Kartaly have identical domestic demand (Do) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $4,000 per television in each country. PRICE (Dollars per television) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 P 20 D₁ O True 0 10 20 30 40 50 60 70 QUANTITY (Millions of televisions) Country Aniva (tariff = $2,000) Kartaly (quota = 40 million televisions) O False ☆ ☆ Suppose that in both countries, demand for televisions rises…arrow_forward
- 4. A graphical comparison of tariffs and quotas Aniva and Kartaly are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 40 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $2,000. In Aniva, the government decides to impose a tariff of $2,000 per television; in Kartaly, the government implements a quota of 40 million televisions. Assume that Aniva and Kartaly have identical domestic demand (Do) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $4,000 per television in each country. PRICE (Dollars per television) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 P Do 20 D₁ O True 0 10 20 30 40 50 60 70 QUANTITY (Millions of televisions) Country Aniva (tariff = $2,000) Kartaly (quota = 40 million televisions) O False ☆ ☆ Suppose that in both countries, demand for televisions rises…arrow_forward1. Now home opens up to trade. How does home's export supply curve change, if at all, after the population growth has occurred, compared to its export supply with only 25 workers? Draw the export supply curve for home for 25 workers and for 35 workers 2. What will happen to the equilibrium relative price of w heat under free trade? Show using a suitable diagram. Hint: Think about what happens to the foreign import demand curve when only home's population grows but foreign's population stays constantarrow_forwardJust clarify "tariffs on a variety of American exports..." to identify who is imposing these tariffs, i.e., the US government or foreign governments?arrow_forward
- With complete specialization in trade, how much clothes and shoes will amazon produce? How much clothes and shoes will the facebook produce?arrow_forward↳ A Click Submit to complete this assessment. Question 33 What insights do welfare analysis (consumer surplus/producer surplus) offer into international trade? O a. That trade increases the welfare of producers, so trade may make total surplus fall. O b. That tariffs make a country better off and trade wars can definitely be won! Oc. That nations are better off NOT trading with each other, because lower world prices harm most nations' producers and consumers. Od. That while trade increases total surplus, consumers or producers in a country may gain or lose, depending on world price. A Click Submit to complete this assessment. tab caps lock shift fn 1 Q 2 A W Z I 3 S E X S D R C F T V G H B J N Karrow_forwardThe graph below shows the trend of the terms of trade for the U.S. and China. Which would be inferred from the graph? Figure 6.9 Evolution of the Terms of Trade for the United States and China 125 120 115 110 - China 105 100 95 90 - 85 80 United Statoo 15 70 1980 1982 1984 1986 1088 1990 1092 1994 O A) China's growth may have hurt the U.S. terms of trade. 1096 1998 2002 2004 2000 B) China's recent growth may have been export-biased. 2006 2008 2010 2012 2014 O C) U.S. terms of trade have been hugely deteriarated over the past decasde. D) U.S. exports have been competing with China's imporing sectors.arrow_forward
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