Microeconomics: Principles & Policy
14th Edition
ISBN: 9781337794992
Author: William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: Cengage Learning
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The following graph shows the market for TV sets in Venezuela. The grey line illustrates the world supply curve of TV sets. Suppose that Venezuela
imposes a quota that limits imports to 300 TV sets.
Use the green points (triangle symbol) to plot the quota-adjusted supply curve on the following graph. (Hint: Make sure you use three points to plot
the curve, which is parallel to the original supply curve, with the last point indicating the upper limit allowed by the graph.) Then, use the black point
(cross symbol) to indicate the new equilibrium point.
PRICE (Dollars per TV set)
600
550
500
450
400
350
300
250
200
150
100
50
0
As a result of the quota, price rises by $
Demand
Supply
SWorld
0 100 200 300 400 500 600 700 800 900 1000
QUANTITY (Number of TV sets)
"
►
Swith quota
+
Ewith quota
and consumer surplus falls by $
(?)
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?
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.
4. Who are the greatest benefactors of China’s tariff on US soybeans?
Chapter 21 Solutions
Microeconomics: Principles & Policy
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