a) Draw a diagram of a free trade case, label imports, consumer and producer surplus. b) Now you want to introduce export quota restrictions q. Calculate the value of the optimal export quota g, which maximizes domestic welfare. Illustrate CS, PS, QR, and DWL on your graph. Calculate their numerical values.
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- Consider a large country with a domestic demand characterized by the inverse demand function P=1000-Q. Domestic supply is represented by the equation P=400+Q. Finally, the world price of the good is 900. You know that an export tariff pass-through is 10%, meaning that foreign price decreases by 10% value of an export tariff t; more generally, 10% of any change in the domestic price is absorbed by the world market. a) Draw a diagram of a free trade case, label imports, consumer and producer surplus. b) Now you want to introduce export quota restrictions q. Calculate the value of the optimal export quota q, which maximizes domestic welfare. Illustrate CS, PS, QR, and DWL on your graph. Calculate their numerical values. c) Would you prefer to use an export quota or an export tariff? Explain why. Why do we see both instruments of trade policy being used? What are the advantages and disadvantages of export quotas compared to export tariffs?Let us consider the case of Good X in Malaysia. The demand and supply functions for Good X in Malaysia are Demand function: QD=363−2P Supply function: QS=22+P If the world price is 70, then is Malaysia an importer or exporter? Find out the quantity of imports at Pw=70 If import quota was 80 units what will be the new price in the Malaysian market? How many Good X will be produced domestically after quota has been implemented? How many Good X will be consumed by domestic consumers after quota has been implemented? What will be the import after implementing import quota of 80 units? (Please give your answers in two decimal places) What is the percentage change in imports after the imposition of import quota? Please give your answers in two decimal places, Multiply by 100 to convert into percenatge (if you get 0.40 then submit 40 in the answer)A small country can import a good at a world price of $10 per unit. The domestic demand and supply curves are given by the following equations: Demand: D = 400 – 5P Supply: S = 20 + 10P, where D is the quantity demanded, S is the quantity supplied, and P is price a) Derive the import demand curve of the country and determine the level of imports. b) Calculate the effects of a per-unit tariff of $ 5 levied on imports on consumers, producers, government revenue, and overall national welfare, using the concepts of consumer surplus, producer surplus, and deadweight loss. c) Suppose that each unit of production yields a marginal social benefit of $10 and calculate the effect of the tariff on total welfare.
- Let us consider the case of Good X in Malaysia. The demand and supply functions for Good X in Malaysia are Demand function: QD=361−2P Supply function: QS=23+P If the world price is 70, then is Malaysia an importer or exporter? Find out the number of imports at Pw=70 (Please give your answers in two decimal places. ) If the import quota was 80 units what will be the new price in the Malaysian market? (Please give your answers in two decimal places.) How many Good X will be produced domestically after the quota has been implemented? (Please give your answers in two decimal places.) How many Good X will be consumed by domestic consumers after the quota has been implemented? (Please give your answers in two decimal places.) What will be the import after implementing an import quota of 80 units (Please give your answers in two decimal places.) What is the percentage change in imports after the imposition of import quota? (Please give your answers in two decimal places, Multiply by 100 to…A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is Q = 50+ 5P. The demand curve is Qd = 400-10P. Suppose for political reasons the government counts a dollar's worth of gain to producers as being worth $2 of either consumer gain or government revenue. Assume the government's objective is to maximize national welfare. The change in the government's objective of a tariff of $5 per unit is $. (Round your answer to the nearest penny.)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 = 11.5 – Q Supply: P = 5.5 + Q Price is in 10 Yuan (¥) per bushel of soybeans and the units for Quantity are 100 million bushels per year. This is to make graphing simpler. This does NOT mean that the price is 10 and quantity is 100. Rather it means that if the price was 40¥ and the quantity was 7,500,000,000 bushels, this would plot as 4 and 7.5 respectively. The world price for soybeans is ¥65/bushel (this would graph as a horizontal line at 6.5). 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: Domestic Demand curve (D), Domestic Supply curve (S), the World Price (WP), and the Price with tariffs (PT), along with the quantities imported both with and without the tariff. Based on your graph, what…
- Consider a small country. The domestic (home) demand is Qd = 120−3P and supply is Qs = 2P −20 whereQs and Qd are the quantity supplied and demanded, respectively, and P is the price per unit.A) Find the equilibrium price and quantity when the domestic market is closed to international trade.Now, suppose the country opens up to international trade, and the world price is $20 per unit.B) Find the new equilibrium price, domestic quantity supplied and demanded, and quantity imported.C) Suppose the domestic government imposes a tariff of $4 per unit. Find the equilibrium price, domesticquantity supplied and demanded, quantity imported, and tax revenue collected.D) Now, suppose the government impose a quota that limits the quantity of imports to 20 units. Find thenew equilibrium price, domestic quantity supplied and demanded, and quantity imported.E) Calculate Consumer surplus, producer surplus, and total surplus, with free tradeF) Calculate Consumer surplus, producer surplus, tax revenue,…Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. A) Consider the use of import tariff vs. import quota in Home country that will result in the same amount of good Y imports and the domestic price of good Y. If quota rents are given to Foreign country, which policy, i.e., import tariff vs. import quota, is preferable by Home country on the basis of its effect on social welfare? Explain your reasoning.Acimera is a small country currently importing goods A, B and C. Each unit of good A produced requires 3 units of good B and 4 units of good C. The current world prices of the three goods are: P (A) = 800, P (B) = 40 and P(C) = 30. The government imposes the following tariffs: 20% on good X, 40% on good B and 50% on good C. Calculate the effective rate of protection for good A.
- Question 12 One of Morocco's top import goods is wheat. Domestic market demand is described as Qn = 69 – 3P, and domestic producers supply wheat according to the function Qs = (5/6)P, where Q is measured in millions of bushels. The perfectly competitive world price of wheat is $6 per bushel. million bushels of wheat are imported under the competitive world price. Suppose the Moroccan government introduces an import quota equal to 23 million bushels of wheat. The new price is $_ per bushel of wheat. million. You must draw and label a graph that As a result of this import quota, domestic producers gain $. enables the TA to follow all of your intermediate steps. Suppose the Moroccan government wanted to achieve the same outcome (reduce imports to 23 million bushels of wheat) with a tariff instead. Relative to the import quota equilibrium, a tariff would cause market efficiency to _million. You must add on to your existing graph to help (increase/decrease/be the same) by $_ the TA to…Consider that the current world price for copper ore is $5.20 per pound. Suppose the domestic market for copper ore in Chile is described by the following demand and supply equations, respectively: P = 8.80 -0.015Q and P = 0.8 +0.025Q, where P is the price per pound, measured in dollars, and Q is the quantity measured in thousands of pounds per month. Similarly, suppose that the domestic market for copper ore in Japan is described by the following demand and supply equations: P = 6.80 -0.02Q and P = 0.8 +0.04Q, where P is the price per pound, measured in dollars, and Q is the quantity measured in thousands of pounds per month. (Question 7 of 8) After receiving requests from lobbyists and domestic producers, the government of the importing country imposes a tariff of $0.30 in the market for copper ore. As a result of the government's policy, what is the change in the government's revenue in the importing country? (report your answer at 2 decimal places)Country C imports 80,000 metric tons of steel from Country U and produces domestically 80,000 metric tons per year. The world price of steel is $500 per metric ton. Assuming linear schedules, research analysts estimated the price elasticity of domestic supply to be 0.50 and the price elasticity of domestic demand to be -0.25 in the current market equilibrium. Country C imposes an import duty of $150 per metric ton that caused the world price to fall by 10%. Analyse the effects of the consumer surplus, producer surplus, government revenue, and deadweight loss in the Country C steel market with the tariff. What are the terms of trade of the Country C steel market after the tariff was imposed? Explain the welfare effects of both countries.