Assume that Trinbago is a small country that produces wine and motor vehicles, where motor vehicles are capital intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin assumptions hold. The other country in the model is Vincyland. 1. Given that Vincyland is a small country, examine the partial equilibrium welfare effects associated with imposing a tariff on their import good given that the prediction of the imported good yields a positive externality.

Assume that Trinbago is a small country that produces wine and motor vehicles, where motor vehicles are capital intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin assumptions hold. The other country in the model is Vincyland. 1. Given that Vincyland is a small country, examine the partial equilibrium welfare effects associated with imposing a tariff on their import good given that the prediction of the imported good yields a positive externality.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.3: Single-stage Decision Problems

Problem 5P

See similar textbooks

Similar questions

Assume that Trinbago is a small country that produces wine and motor vehicles, where motorvehicles are capital intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin(H-O) assumptions hold. The other country in the model is Vincyland Given that Vincyland is a small country, examine the partial equilibrium welfare effectsassociated with imposing a tariff on their import good given that the prediction of theimported good yields a positive externality.Should a subsidy have given a moredesirable solution.
Economics Daegu considers producing electric razors for men. If the market demand is high, he would get a return of $100,000, but if there were a low demand for this type of razor, he would lose $60,000. Daegu also considers the possibility of ordering a market survey to gather additional information about the market demand. The survey includes a sophisticated questionnaire administered to a test market and costs $5,000. Daegu believes that there is a 62:38 chance that the market information will be favorable (i.e., predicting a high market demand) and unfavorable (i.e., predicting a low market demand). Furthermore, the probabilities of a favorable survey given a high market demand and an unfavorable survey given a low demand are both 0.8. Daegu is not sure if the value of the survey is worth the cost Draw the decision tree and advise Daegu
Assume that for a closed economy, E = C + I + G,where E = Total expenditure on Consumption Goods,I = Exp. on Investment GoodsG = Govt. spendingFor equilibrium, we must have E=Y, Y being total income received.For a certain Economy, it is given that C=15 + 0.9Y, where I=20 + 0.05Y and G=25.Find the equilibrium values of Y, C, and I. How will these change, if there is no Govt.spending?
The consumption function for a closed economy with no government sector is given by theequation:C = £200 million + 0.8 Ywhere C is aggregate consumption and Y is national income.(i) Calculate the value of aggregate savings if the level of national income is £4000 million.(ii) Calculate the equilibrium level of national income if the level of planned investment is£600 million(iii) Calculate the level of aggregate consumption at the equilibrium level of nationalincome if the level of planned investment is £1000 million(iv) Calculate the change in national income if planned investment rose from £600 millionto £800 million
Consider a 3-month European put option on a non-dividend-paying stock. The current stock price is $52, the strike price is $50, the risk-free interest rate is 12% per annum, and the volatility is 30% per annum. What is the price of the put according to the Black-Scholes-Merton model?
A market consists of groups of buyers and sellers of a good or service. Market equilibrium represents the price at which the quantity of goods supplied is balanced with the number of goods consumers are willing and able to buy. Consider the market for coffee: Assume first that there is a heatwave that damages a large portion of coffee beans. Describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Next, assume there is a new study that finds enormous health benefits to coffee consumption. Again, describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Now, extend your analysis to what might happen if both of these events (weather which damages coffee beans and positive news on the health benefits of coffee) happen…
Suppose the economy is in recession. Policymakers estimate that aggregate demand is$100 billion short of the amount necessary to generate the long run natural rate of output.That is, if aggregate demand were shifted to the right by $100 billion, the economy wouldbe in long run equilibrium.a. Explain the impact on the economy if the government chooses to use fiscal policy tostabilize the economy and the marginal propensity to consume (MPC) is given as0.75 with no crowding out.b. If there is a crowding out effect and investment is very sensitive to changes in theinterest rate, should the government increase spending more or less than this amount?
Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of meekers is $38. Suppose that the world price of meekers is $36. Assume that Meekertown is too small to influence the world price of meekers once it enters the international market. If Meekertown allows free trade, then it will meekers. Given current economic conditions in Meekertown, complete the following table by indicating whether each of the statements is true or false. Statement True False Meekertownian consumers were better off without free trade than they are with it. Meekertownian producers were worse off without free trade than they are with it. True or False: When a country is too small to affect the world price, allowing free trade will sometimes decrease total surplus in that country, regardless of whether it imports or exports as a result of international trade. True False
You are considering three investment alternatives for some spare cash: Old Reliable Corporation stock (A1), Fly-By-Nite Air Cargo Company stock (A2), and a federally insured savings certificate (A3). You expect the economy will either "boom" (N1) or “bust” (N2), and you estimate that a boom is more likely (p1 = 0.6) than a bust (p2 = 0.4). Outcomes for the three alternatives are expected to be (1) $2000 in boom or $500 in bust for ORC; (2) $6000 in boom but $-5000 (loss) in bust for FBN: and (3) $1200 for the certificate in either case. Set up a payoff table (decision matrix) for this problem and show which of it Alternative maximizes expected value.
Phillips-Van Heusen owns or licenses 19 of America’s most successful apparel and footwear brands. Its multiple brands, multiple channels, and multiple price point strategies are designed to provide stability should market trends such as the economy or consumer taste shift. In other words, if a recessionary period occurs, the company can sell its Arrow and private-label brands in discount stores. In the event of a prosperous economic time, the company can benefit from the sale of its Calvin Klein and Kenneth Cole brands in specialty stores. In either economic scenario, the company can remain profitable using the: A. principles of administrative management B. human relations approach to management C. principles of bureaucratic management D. systems approach to management E. contingency approach to management
2. Suppose the economy is in recession. Policymakers estimate that aggregate demand is $100 billion short of the amount necessary to generate the long run natural rate of output. That is, if aggregate demand were shifted to the right by $100 billion, the economy would be in long run equilibrium. a. Explain the impact on the economy if the government chooses to use fiscal policy to stabilize the economy and the marginal propensity to consume (MPC) is given as 0.75 with no crowding out. b. If there is a crowding out effect and investment is very sensitive to changes in the interest rate, should the government increase spending more or less than this amount?
Describe two (2) positive and two (2) negative effects, decisions etc., that a rise in the price of animal feed, due to the shortage of soybean meal and corn, may or will have on a typical household in a country.