PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Question
Chapter 16.A, Problem 1P
(a)
To determine
Identify the
(b)
To determine
Effects of world price in quantity demanded, supplied, exports, and imports.
(c)
To determine
Effects of import tariffs in quantity demanded, supplied, exports, and imports.
(d)
To determine
Effect of import quotas in a government revenue.
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QUESTION 24
Figure 8.1 depicts the supply and demand schedules of calculators for Greece, a "small" country that is unable to affect the world price. Greece's
supply and demand schedules of calculators are respectively depicted by SG and DG Assume that Greece imports calculators from either
Germany or France. Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $20 per unit, while France can
supply calculators at $30 per unit.
Figure 8.1. Effects of a Customs Union
70
40
88
10
O
2 3
S
7
Quantity of
Cataton
Consider Figure 8.1. Suppose Greece had formed a customs union with Germany, rather than France. The value of the trade diversion effect
would be:
a. $5
b. $15
C. SO
d. $3
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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)
Consider a small country that exports steel. Suppose the following graph depicts the domestic demand and supply for steel in this country. One of the two price lines represents the world price of steel.
Because this country exports steel, the world price is represented by(p1 or p2) .
Suppose that a “pro-trade” government decides to subsidize the export of steel by paying $10 for each ton sold abroad.
With this export subsidy, the price paid by domestic consumers is $______
per ton, and the price received by domestic producers is$_______per ton. The quantity of steel consumed by domestic consumers (reamins unchanged, decrease, and increase) , the quantity of steel produced by domestic producers (reamins unchanged, decrease, and increase) , and the quantity of steel exported (reamins unchanged, decrease, and increase) .
True or False: With the export subsidy, this country will start importing steel from abroad.
Under the export subsidy, consumer surplus is…
Chapter 16 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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