Macroeconomics
13th Edition
ISBN: 9780134744452
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 15, Problem 24APA
To determine
Identify the price, quantity of production, and the
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Georgia and Moldova are famous for their quality of wine and the United Kingdom decides to
start importing from them. There is an 5£ tariff on imported wine. Considering the graph
below, where does the UK buy its wine from and how much does it cost on the domestic
market?
Price per bottle
£10
£7
Moldovan price
£5
Georgian price
UK demand for imported wine
Quantity
(millions of bottles per year)
10
15
22
Suppose the UK joins a trade bloc with Moldova and maintains its 5£ tariff on wine from
outside the bloc.
a) What will the new domestic price be?
b) How much do consumers gain/lose?
c) How about the government?
d) Is there trade creation or trade dıversion or both?
e) How much does the UK gain/lose?
Exporting countries
Which of the following will be true, everything else remaining constant, for a country that exports some good?
a)The greater the price elasticity of supply for the good in the exporting country, the greater the volume of exports.
b) The more that consumers in the exporting country respond to a change in price, the greater will be the gains from trade.
b) The smaller the price elasticity of demand and supply in the exporting country, the greater the gains from trade.
c) Some domestic suppliers will lose surplus while others will gain surplus.
Choose the statements that match the question and briefly explain your reasoning to understand the question better. Thankyou.
Vietnam has a policy of free trade in motorcycles which are sold in world markets at a price of 10,000 per motorcycle.
Under free trade, Vietnam produces 100,000 motorcycles and imports 100,000 motorcycles. To provide some protection
to the domestic industry, Vietnam imposes an import tariff of $1500 per motorcycle. With this tariff in place, production
in Vietnam rises by 5,000 motorcycles and consumption drops by the same amount. Calculate the effects of the tariff on:
a. Consumer Surplus b. Producer Surplus c. Government Revenues d. Overall Welfare e. If the tariff imposed by the
Vietnamese had led to small reduction in world prices of, say, 250 dollars, how, qualitatively, would the welfare
calculations (a), (b), (c) and (d) above change?
Chapter 15 Solutions
Macroeconomics
Ch. 15.1 - Prob. 1RQCh. 15.1 - Prob. 2RQCh. 15.2 - Prob. 1RQCh. 15.2 - Prob. 2RQCh. 15.2 - Prob. 3RQCh. 15.3 - Prob. 1RQCh. 15.3 - Prob. 2RQCh. 15.3 - Prob. 3RQCh. 15.3 - Prob. 4RQCh. 15.3 - Prob. 5RQ
Ch. 15.4 - Prob. 1RQCh. 15.4 - Prob. 2RQCh. 15.4 - Prob. 3RQCh. 15.4 - Prob. 4RQCh. 15.4 - Prob. 5RQCh. 15 - Prob. 1SPACh. 15 - Prob. 2SPACh. 15 - Prob. 3SPACh. 15 - Prob. 4SPACh. 15 - Prob. 5SPACh. 15 - Prob. 6SPACh. 15 - Prob. 7SPACh. 15 - Prob. 8SPACh. 15 - Prob. 9SPACh. 15 - Prob. 10SPACh. 15 - Prob. 11SPACh. 15 - Prob. 12APACh. 15 - Prob. 13APACh. 15 - Prob. 14APACh. 15 - Prob. 15APACh. 15 - Prob. 16APACh. 15 - Prob. 17APACh. 15 - Prob. 18APACh. 15 - Prob. 19APACh. 15 - Prob. 20APACh. 15 - Prob. 21APACh. 15 - Prob. 22APACh. 15 - Prob. 23APACh. 15 - Prob. 24APACh. 15 - Prob. 25APACh. 15 - Prob. 26APACh. 15 - Prob. 27APACh. 15 - Prob. 28APA
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- Assume the United States is an importer of televisions and there are no trade restrictions. US consumers buy 1 million televisions per year, of which 400,000 are produced domestically and 600,000 are imported,a. Suppose that a technological advance among Japanese television manufacturers causes the world price of televisions to fall by $100. Draw a graph to show how this change affects the welfare of U.S. consumers and U.S. producers and how it affects total surplus in the United States.b. After the fall in price, consumers buy 1.2 million televisions, of which 200,000 are produced domestically and 1 million are imported. Calculate the change in consumer surplus, producer surplus, and total surplus from the price reduction. c. If the government responded by putting a $100 tariff on imported televisions, what would this do? Calculate the revenue that would be raised and the deadweight loss. Would it be a good policy from the standpoint of U.S. welfare? Who might support the policy?d.…arrow_forwardKazakhstan is an apple producer, as well as an importer of apples. Suppose the following graph shows Kazakhstan's domestic market for apples, where Sx is the supply curve and Dx is the demand curve. The free trade world price of apples (Pw) is $200 per ton. Suppose Kazakhstan's government restricts imports of apples to 120,000 tons. The world price of apples is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of apples with a quota of 120,000 apples. PRICE (Dollars perton) 1000 900 800 700 000 500 400 300 200 -- 100 D 0 30 00 90 120 160 Sk 180 210 240 270 300 5x+Q -- Price with Quota Change in PS Quota Rents DWLarrow_forwardQUESTION 12 Mexico is an importer of rice. The world price of a kilo of rice is $10. Mexico imposes a $2-per-kilo tariff on rice. Mexico is a price-taker in the rice market. As a result of the tariff, Mexican consumers of rice become worse off and Mexican producers of rice become worse off. Mexican consumers of rice become worse off and Mexican producers of rice become better off. Mexican consumers of rice become better off and Mexican producers of rice become worse off. Mexican consumers of rice become better off and Mexican producers of rice become better off.arrow_forward
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