Question

) The home country is small and imports at the equilibrium world price of $3. The...

) The home country is small and imports at the equilibrium world price of $3. The home country has the following domestic demand and supply curves for cars: Demand: Qd=1000 – 100P Supply: QS=100P -200 a. (6 points) Draw two graphs, one for home country and one for the world market with the appropriate (labeled) curves. Under the scenario of free trade, calculate and label the following in the appropriate places: (1) home country no-trade (autarky) price; (2) import demand curve in the world market; (3) the number of cars produced by home country’s producers; (4) the number of cars consumed in home country; (5) the number of imports for home country. b. (6 points) Imagine that home country institutes a tariff of $2 per cars. Calculate and label (on your previous graphs) the following in the appropriate places AFTER the tariff is imposed: (1) price paid by the home country consumers; (2) the number of cars produced by home country’s producers; (3) the number of cars consumed in home country; (4) the number of imports for home country. c. (4 points) Calculate the deadweight loss due to the tariff and label the area on both graphs (home graph and world market graph) that represents it. d. (4 points) Calculate the tariff revenue and label the area on both graphs (home graph and world market graph) that represents it.

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
The world consists of two countries: Home and Foreign. We observe supply and demand curves in...
The world consists of two countries: Home and Foreign. We observe supply and demand curves in both countries: D= 50?25P and S=25P in Home D* = 200?25P* and S* = 25P?50 in Foreign a) Derive MD (import demand) and XS (export supply) curves. b) Graph MD and XS. Find the world equilibrium (price and quantity) under free trade. c) Suppose that importer imposes a tariff t = 2. Find the new prices in Home and Foreign. How will the volume...
Wheat is freely traded in the world market. Assume that a country, Austria, is a price...
Wheat is freely traded in the world market. Assume that a country, Austria, is a price taker in the world market for wheat. Some of the wheat consumed in Austria is produced domestically while the rest is imported. The world price of wheat is $2 per pound. At the world price, Austria produces 2 million pounds but consumes 14 million pounds. The domestic price is $5. At the domestic price, Austria consumes 8 million pounds of wheat. Austria proposes a...
Consider a small country that imports good Z. Some of the total quantity of Z domestically...
Consider a small country that imports good Z. Some of the total quantity of Z domestically consumed is supplied by domestic producers and the rest of it is imported. Then suppose that the government imposed a tariff on each unit of Z that is imported, so that the quantity of Z imported is somewhat reduced. Draw a demand and supply diagram that shows the effect of the tariff. On your diagram clearly label the quantity of imports before the tariff...
Draw and label a graph depicting world trade in which the world price is perfectly elastic...
Draw and label a graph depicting world trade in which the world price is perfectly elastic and lower than the country price. Start with a graph depicting market equilibrium with the demand curve and supply curves having slopes of approximately 1 (negative 1 for demand). Modify the graph to demonstrate the world market price being lower than the country market price.
A small country both produces and imports bread, the world price of which is $1 per...
A small country both produces and imports bread, the world price of which is $1 per loaf. Production of the bread causes a pleasant smell, which the producers of bread are unable to charge for, and which the people in the country enjoy. In fact, it has been ascertained that the value of this smell to society is $0.50 per loaf.   Would a tariff of $0.50 per loaf necessarily be beneficial? Why or why not? Explain.
A small country both produces and imports bread, the world price of which is $1 per...
A small country both produces and imports bread, the world price of which is $1 per loaf. Production of the bread causes a pleasant smell, which the producers of bread are unable to charge for, and which the people in the country enjoy. In fact, it has been ascertained that the value of this smell to society is $0.50 per loaf.   1. Show and explain why, in the absence of any other policy, a tariff on bread in this country...
A small country both produces and imports bread, the world price of which is $1 per...
A small country both produces and imports bread, the world price of which is $1 per loaf. Production of the bread causes a pleasant smell, which the producers of bread are unable to charge for, and which the people in the country enjoy. In fact, it has been ascertained that the value of this smell to society is $0.50 per loaf.   1. Show and explain why, in the absence of any other policy, a tariff on bread in this country...
Suppose that under free trade, country A is a small importer of good Z at the...
Suppose that under free trade, country A is a small importer of good Z at the amount M1. The government is considering imposing some trade restriction to reduce the amount of imports to M2(<M1). (6 points) Use a graph to analyze the impact of a tariff t that reduces the amount of import to M2 on country A’s domestic market price, consumption, production, and welfare. Clearly label the graph for full credits.
The following are the equations of demand and supply of rice in Home Country and Foreign...
The following are the equations of demand and supply of rice in Home Country and Foreign Country. P in the equations is the price of rice in the same currency. Home Country’s demand for rice is QDH = 2,400 – 30P Home Country’s supply for rice is QSH = 50P Foreign Country’s demand for rice is QDF = 4,800 – 40P Foreign Country’s supply for rice is QSF = 80P Calculate i) the equilibrium price of rice in Home Country...
Trade barriers Suppose there are only two countries in the world (Home and Rest of the...
Trade barriers Suppose there are only two countries in the world (Home and Rest of the World) which produce and consume wheat. The price of wheat in Rest of the World is equal to 2 and Home is a small country with the following demand and supply functions for wheat: ?h = 50 − 10? ?h = 30 + 10? a. Compute and graph the equilibrium in the absence of trade. What would be the consumer and producer surplus? b....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT