Question

Suppose the world price of bicycles is below the domestic price in a small open economy....

Suppose the world price of bicycles is below the domestic price in a small open economy.

a. (3) In that small open economy, who would benefit from free trade? Briefly explain.

b. (3) In that small open economy, who would be hurt from free trade? Briefly explain.

c.(3)   Who would benefit from a tariff on bicycles? Briefly explain.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose the world price of bicycles is below the domestic price in a small open economy....
Suppose the world price of bicycles is below the domestic price in a small open economy. a. (3) In that small open economy, who would benefit from free trade? Briefly explain. b. (3) In that small open economy, who would be hurt from free trade? Briefly explain. c.(3) Who would benefit from a tariff on bicycles? Briefly explain.
1) Suppose the domestic supply (QS U.S.) and demand (QDU.S) for bicycles in the United States...
1) Suppose the domestic supply (QS U.S.) and demand (QDU.S) for bicycles in the United States is represented by the following set of equations: QS U.S. = 2P QDU.S. = 200 – 2P. Demand (QD) and supply (QS) in the rest of the world is represented by the equations: QS = P QD =160 – P. Quantities are measured in thousands and price, in U.S. dollars. After the opening of free trade with the United States, if the world price...
Suppose the domestic supply (QSUS) and demand (QDUS) for bicycles in the United States are given...
Suppose the domestic supply (QSUS) and demand (QDUS) for bicycles in the United States are given by the following set of equations: QSUS = 2P QDUS = 200 – 2P Demand (QD) and supply (QS) in the rest of the world are given by the equations: QS = P QD =160 – P Quantities are measured in thousands and price in U.S. dollars. After the opening of free trade with the rest of the world, if the world price of...
Suppose Colombia is open to free trade in the world market for soybeans because of Colombia...
Suppose Colombia is open to free trade in the world market for soybeans because of Colombia small size the demand for and supply of soybeans in Colombia do not affect the world price the following graph shows the domestic soybeans market in Colombia the world price of soybeans is $400 per ton
Suppose that domestic demand in the market for good X is given by the equation Qd...
Suppose that domestic demand in the market for good X is given by the equation Qd = 60 - P. And that domestic supply in the market for good X is given by the equation Qs = 2P Suppose the world price is $10 and the country allows free trade. What is consumer surplus with free trade? Suppose the government imposes a $5 tariff on imports. What is the gain to suppliers from this tariff? What is the gain to...
Suppose the world price for shoes is $32 per pair. Domestic demand and domestic supply are...
Suppose the world price for shoes is $32 per pair. Domestic demand and domestic supply are determined by the following equations: Domestic Demand: p = 120 - 2q Domestic Supply: p = 20 + 3q where p and q represent price and quantity, respectively 9. What is the net loss to the domestic economy if the above import quota of 30 pairs of shoes is implemented under the arrangement of Voluntary Export Restraint (VER)? A) $60 B) $120 C) $360...
Consider a small open economy of Guyana that faces the following domestic demand and supply for...
Consider a small open economy of Guyana that faces the following domestic demand and supply for sugar. Supply: Q = 0.25P − 2.5 Demand: Q = 50 − P where quantity is in metric tons and price is in Guyanese dollars (GYD). Suppose the world price of a metric ton of sugar is GYD 20. What is the quantity of sugar that the country imports? Feeling that local producers of sugar need protection from foreign competition, the government imposes a...
Suppose that the equations S = 2P and D = 60 – P represent the domestic...
Suppose that the equations S = 2P and D = 60 – P represent the domestic supply and demand for Home market. All markets in this question are under perfect competition. a. Suppose Home is a small country and the price in the international market is 15. i. (4’)Suppose that Home uses a TRQ, tariff-rate quota, in the market: 5 units will be allowed to be imported tariff free and a 20% tariff rate will be charged in excess of...
2. The government of a small open economy in the long run wishes to promote trade...
2. The government of a small open economy in the long run wishes to promote trade policies that will result in currency appreciation (increasing the real exchange rate). A) Would protectionist policies (higher tariffs and more quotas) or freer trade policies (tariff reductions and quota eliminations) be more effective in generating currency appreciation? B) Illustrate graphically the impact of the trade policy on the exchange rate of the small open economy. C) What will happen to the trade balance of...
Suppose that the world price for a good is 120 and the domestic demand-and-supply curves are...
Suppose that the world price for a good is 120 and the domestic demand-and-supply curves are given by the following equations: Demand: P = 200 – 8Q Supply: P = 20 + 10Q       a. How much is domestic consumption?       b. How much is domestic production?       c. Calculate the values of consumer and producer surplus.       d. If a tariff of 30% is imposed, how much do consumption and domestic production change?       e. What is the change...