The following graph shows the domestic demand for and supply of maize in Kenya. The world price (Pw) of maize is $260 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 485 Domestic Demand Domestic Supply 460 435 410 385 360 335 310 285 260 235 w 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Tons of maize) If Kenya is open to international trade in maize without any restrictions, it will import ? tons of maize. Suppose the Kenyan government wants to reduce imports to exactly 20 tons of maize to help domestic producers. A tariff of $ achieve this. A tariff set at this level would raise $ in revenue for the Kenyan government. per ton will

The following graph shows the domestic demand for and supply of maize in Kenya. The world price (Pw) of maize is $260 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 485 Domestic Demand Domestic Supply 460 435 410 385 360 335 310 285 260 235 w 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Tons of maize) If Kenya is open to international trade in maize without any restrictions, it will import ? tons of maize. Suppose the Kenyan government wants to reduce imports to exactly 20 tons of maize to help domestic producers. A tariff of $ achieve this. A tariff set at this level would raise $ in revenue for the Kenyan government. per ton will

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

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The following graph shows the domestic supply of and demand for wheat in New Zealand. The world price (PWPW) of wheat is $255 per bushel and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.
Suppose the demand and the supply for lumber (harvested wood processed in a sawmill) used for construction in Australia are given by QD =100 – 2P QS = 2P Assume also that the market is perfectly competitive. 2.1. Compute the equilibrium price P* and quantity Q*. 3.1 Suppose the lumber market described in 2.1 was closed to the rest of the world. Now it opens to trade and the world price of lumber is 20. Compute the equilibrium price, quantity supplied by domestic producers, and quantity demanded by domestic consumers.
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The graph below shows the market for tires in the United States, a nation that is open to international trade but is assumed to be a price taker unable to affect the world price of tires. a. Using the graph above, at the world price of $80 per tire, how many tires will the United States import? _____million tires Now Suppose the U.S. government imposes a quota as shown in the graph above. b. Using this same graph, indicate the new market equilibrium with the quota imposed and the domestic quantity supplied (Qs). Instructions: Use the tools provided "New Equilibrium" and "Qs + quota" to indicate the new market price, quantity demanded, and domestic quantity supplied with this quota. c. As a consequence of this quota, how many tires will the United States import now? _____million tires How many tires will be supplied domestically? _____million tires Now suppose instead that the U.S. government imposes a quota with the goal of reducing the number of tires…
The following graph shows the domestic market for oil in the United States, where SDSD is the domestic supply curve, and DDDD is the domestic demand curve. Assume the United States is considered a large nation, meaning that changes in the quantity of its imports due to a tariff influence the world price of oil. Under free trade, the United States faced a total supply schedule of SD+WSD+W, which shows the quantity of oil that both domestic and foreign producers together offer domestic consumers. In this case, the free-trade equilibrium (black plus) occurs at a price of $240 per barrel of oil and a quantity of 9 million barrels. At this price, the United States imports 6 million barrels of oil. Suppose the U.S. government imposes a $60-per-barrel tariff on oil imports.
Question 31 Consider a small country where the domestic market for sandals is described by the following demand and supply equations, respectively: P = 100 – (1/2)Q and P = 20 + (1/3)Q where P represents the price of a pair of sandals and Q represents the quantity of sandals. The world price for a pair of sandals is $45. Therefore the gains from trade would be $135.00 $102.50 $88.75 $122.50
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Suppose Colombia is open to free trade in the world market for soybeans. Because of Colombia’s 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 PW=$400 per ton.
Refer to Figure above. Explain and show the changes on the diagram to each scenarios what will happen to the price on the world market if Thailand pursues each of the following policies? (a) Scenario A -- A permanent prohibition of watch imports into Thailand. (b) Scenario B -- A large tariff on watch imports that is left in place only until a new equilibrium is reached, and then removed. (c) Scenario C -- A permanent subsidy to watch production in Thailand equal to C0 − P2.
When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing. Suppose the following graph represents the market for clothing in Cambodia prior to the expansion of China's clothing industry. Cambodia is an ______ of clothing because the world price is the domestic equilibrium price. Note: You will have to use green points (triangle symbol) and purple points (diamond symbol) to shade the consumer and producer surplus areas on the following graphs. There are two green points and two purple points per graph. Use either one point of both to most accurately indicate the areas. For example, if indicating the consumer surplus requires only one green point, leave the second one on the palette. Use the green point (triangle symbol) to shade consumer surplus in Cambodia before China's clothing industry expands. Then use the purple point (diamond symbol) to…
When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing. Suppose the following graph represents the market for clothing in Cambodia prior to the expansion of China's clothing industry. Cambodia is an of clothing because the world price is the domestic equilibrium price. Note: You will have to use green points (triangle symbol) and purple points (diamond symbol) to shade the consumer and producer surplus areas on the following graphs. There are two green points and two purple points per graph. Use either one point of both to most accurately indicate the areas. For example, if indicating the consumer surplus requires only one green point, leave the second one on the palette. Use the green point (triangle symbol) to shade consumer surplus in Cambodia before China's clothing industry expands. Then use the purple point (diamond symbol) to shade…
Consider a small country where the domestic market for sandals is described by the following demand and supply equations, respectively: P = 100 – (1/3)Q and P = 20 + (1/2)Q where P represents the price of a pair of sandals and Q represents the quantity of sandals. The world price for a pair of sandals is $60. Therefore the gains from trade would be