Answers to review quizzes marcroeconomics 12e parkin chapter 15

17 26 1
  • Loading ...
1/17 trang

Thông tin tài liệu

Ngày đăng: 16/04/2018, 10:31

W H AT I S E C O N O M I C S ? Answers to the Review Quizzes 243 INTERNATIONAL TRADE POLICY Page 416 Describe the situation in the market for a good or service that the United States imports The goods and services the United States will import are those in which the United States has a higher opportunity cost of production relative to other countries In those markets the U.S no-trade price is higher than the world price With trade the quantity produced in the United States is less than the quantity consumed and the difference is imported Describe the situation in the market for a good or service that the United States exports The goods and services the United States will export are those in which the United States has a lower opportunity cost of production relative to other countries In those markets the U.S no-trade price is lower than the world price With trade the quantity produced in the United States exceeds the quantity consumed and the excess is exported Page 417 How is the gain from imports distributed between consumers and domestic producers? Consumers gain from imports and domestic producers lose from imports How is the gain from exports distributed between consumers and domestic producers? Consumers lose from exports and domestic producers gain from exports Why is the net gain from international trade positive? The net gain from international trade is positive because the gain to the winners exceeds the losses to the losers For instance, in the case of an imported good, the gain to consumers exceeds the loss to producer so society gains on net The situation is similar for exports: The gain to producers exceeds the loss to consumers Page 423 What are the tools that a country can use to restrict international trade? 243 244 A country can use tariffs, import quotas, other import barriers such as health, safety, and regulation barriers, and voluntary export restraints to restrict international trade Export subsidies also decrease other countries’ exports and restrict their international trade Explain the effects of a tariff on domestic production, the quantity bought, and the price A tariff raises the domestic price of the product The higher price increases domestic production and decreases the domestic quantity purchased Explain who gains and who loses from a tariff and why the losses exceed the gains Domestic consumers lose from the tariff Domestic producers gain from the tariff The government also gains revenue from the tariff But the gain to producers plus the gain in government revenue is less than the loss to consumers, so on net a tariff creates a social loss There is a social loss for two reasons: First, high-cost domestic production expands, so society uses more resources producing some high-cost units of the good than it would use if low-cost foreign units were purchased Second the high price leads domestic consumers to decrease their consumption of the good, thereby robbing society of the benefits these units would have produced Explain the effects of an import quota on domestic production, consumption, and price An import quota raises the domestic price of the product The higher price increases domestic production and decreases domestic purchases Explain who gains and who loses from an import quota and why the losses exceed the gains Domestic consumers lose from the import quota Domestic producers gain from the import quota The importers also gain additional profit from the import quota But the gain to producers plus the importers’ profits is less than the loss to consumers, so on net an import quota creates a social loss There is a social loss for two reasons: First, high-cost domestic production expands, so society uses more resources producing some high-cost units of the good than it would use if low-cost foreign units were purchased Second the high price leads domestic consumers to decrease their consumption of the good, thereby robbing society of the benefits these units would have produced Page 427 What are the infant industry and dumping arguments for protection? Are they correct? The attempt to stimulate the growth of new industries is the infant-industry argument for protection, which states that it is necessary to protect a new industry from import competition to facilitate the growth of that industry, making it competitive in the world markets This argument is based on the concept of dynamic competitive advantage Learning-by-doing is a powerful engine of productivity growth However the learning-by-doing argument for protection only works if the benefits also spill over into other industries and other parts of the economy This is rarely the case, as the entrepreneurs of infant industries and their financial supporters take this risk into account and all returns usually accrue only to them, not to other industries And it is more efficient to subsidize the infant industry needing protection than it is to protect it by restricting trade The dumping argument for protection states that a foreign firm is selling its exports at a lower price than its cost of production Foreign firms trying to monopolize the international market may use this practice Once the competition is 244 W H AT I S E C O N O M I C S ? 245 gone, the foreign firm will raise prices and reap profits This argument fails for several reasons First, it is virtually impossible to detect the occurrence of dumping since it is impossible to verify a firm’s production costs The test most commonly used is if the export price is lower than the import price This test only examines the supply side of the two markets and ignores the demand side If the domestic market is inelastic and the export market is elastic (which is almost always the case) then it is natural for a firm to price the domestic goods higher than the exports Second, it is difficult to see how a global firm could have a monopoly for the goods or services it exports There are too many foreign suppliers (and potential suppliers), making global competition too extensive for a monopoly to exist in the global market And, even if there is global monopoly it is more efficient to regulate it than to impose trade restrictions on its products Can protection save jobs and the environment and prevent workers in developing countries from being exploited? There are many myths about trade restrictions The problem mentions three of them, all false reasons often offered as reasons to restrict international trade These arguments are:  Trade restrictions save domestic jobs: This argument ignores the fact that, under free trade, consumers in the importing country will have greater disposable income and citizens in the exporting countries will have greater incomes This means total demand for the goods and services that are exported by our domestic industry increases, increasing the number of jobs created in the domestic industries under free trade  Trade restrictions penalize lax environmental standards: Not all developing countries have lax environmental standards Also, a clean environment is a normal good Countries that are relatively poor and have lax pollution standards not care as much about the environment because imposing clean air, water, and land standards have a high opportunity cost because they will slow economic development The best way to encourage environmental quality is not to restrict economic development but to encourage rapid economic growth, which will more quickly increase citizen demand for a cleaner environment in those developing countries  Trade restrictions prevent rich countries from exploiting poorer countries: Importing goods made in countries with low wage levels increases the demand for labor in those countries, increasing the number of jobs available and raising wages over time The more free trade that occurs with these countries, the more quickly the wages will rise and the working conditions will increase in quality and safety What is offshore outsourcing? Who benefits from it and who loses? Offshore outsourcing occurs when a firm in the United States buys finished goods, components, or services from firms in other countries Workers who have skills for jobs that have been sent abroad lose from offshore outsourcing Consumers who consume the goods and services produced abroad and imported into the United States benefit What are the main reasons for imposing a tariff? There are two main reasons for imposing tariffs on imports First the government receives tariff revenues from imports, which can be useful when revenues from income taxes and sales taxes are less effective ways of gaining government revenue Second rent seeking by individuals in industries that would be hurt by foreign competition can influence the government to impose tariffs Why don’t the winners from free trade win the political argument? 245 246 Trade restrictions are enacted despite the inherent inefficiency because of the political actions of rent seeking groups, which fear that foreign competition might have a negative impact on their industry, firm, or jobs The anti-trade groups are easily organized and have much to gain from trade restrictions, whereas the vast millions of consumers, who would win from free trade, are difficult to organize because each individual has only a small amount of loss when trade restrictions are imposed Hence the winners from trade restrictions frequently out-lobby the winners from free trade 246 Answers to the Study Plan Problems and Applications Use the following data to work Problems Price Quantity Quantity to (dollars demanded supplied Wholesalers buy and sell roses in per (millions of containers containers that hold 120 stems The container) per year) table provides information about the 100 15 wholesale market for roses in the United 125 12 States The demand schedule is the 150 wholesalers’ demand and the supply 175 6 schedule is the U.S rose growers’ 200 supply Wholesalers can buy roses at 225 10 auction in Aalsmeer, Holland, for $125 per container a Without international trade, what would be the price of a container of roses and how many containers of roses a year would be bought and sold in the United States? Without international trade, in the United States the price of a container of roses is $175 and million containers of roses are bought and sold b At the price in your answer to part (a), does the United States or the rest of the world have a comparative advantage in producing roses? The price of roses in the United States exceeds the price in the rest of the world, so the rest of the world has a comparative advantage in producing roses If U.S wholesalers buy roses at the lowest possible price, how many they buy from U.S growers and how many they import? The price of roses in the United States is $125 per container At this price, U.S rose growers supply million containers per year and U.S wholesalers demand 12 million containers of roses U.S wholesalers buy the million containers from U.S growers and purchase 10 million containers from foreign sources, which are imported into the United States Draw a graph to illustrate the U.S wholesale market for roses Show the equilibrium in that market with no international trade and the equilibrium with free trade Mark the quantity of roses produced in the United States, the quantity imported, and the total quantity bought In Figure 15.1, the equilibrium without international trade is determined at the intersection of the demand curve and the supply curve Without international trade the equilibrium price is $175 per container and million containers per year are bought and produced With international trade the world price is $125 per container, as shown in Figure 15.1 The quantity produced in the United States is million containers and the quantity bought in the United States is 12 million containers Imports into the I N T E R N AT I O N A L T R A D E P O L I C Y United States account for the difference between the quantity bought and the quantity produced, 10 million containers Use the information on the U.S wholesale market for roses in Problem to a Explain who gains and who loses from free international trade in roses compared to a situation in which Americans buy only roses grown in the United States U.S rose wholesalers, who are the consumers in the problem, gain from free international trade U.S rose growers lose from free international trade b Calculate the value of the roses imported into the United States The United States imports 10 million containers of roses per year The price of a container is $125, so the value equals (10 million containers) × ($125 per container), $1.25 billion Use the information on the U.S wholesale market for roses in Problem to work Problems to 10 If the United States puts a tariff of $25 per container on imports of roses, explain how the U.S price of roses, the quantity of roses bought, the quantity produced in the United States, and the quantity imported changed The U.S price of roses rises from $125 per container (the price with free trade) to $150 per container The quantity of roses produced in the United States increases from million containers (the quantity produced with free trade) to million containers The quantity of roses consumed in the United States decreases from 12 million containers (the quantity consumed with free trade) to million containers The quantity imported decreases from 10 million containers to million containers Who gains and who loses from this tariff? U.S rose consumers lose from the tariff U.S rose producers gain from the tariff The U.S government gains revenue from the tariff Draw a graph of the U.S market for roses to illustrate the gains and losses from the tariff and on the graph identify the gains and losses, and the tariff revenue Figure 15.2 shows the effect of the tariff The amount of the tariff is equal to the height of the light gray arrow In the United States, the price of a container of roses rises from $125 per container to $150 per container Before the tariff U.S rose producers grew million containers per year; after the tariff they increase their production to million containers per year This change is shown in the figure by the movement from point a to point b Before the tariff U.S rose wholesalers, the consumers in this problem, purchased 12 million containers per year; after the tariff they decrease their consumption to million containers per year This change is shown in the figure by the movement from point c to point d The quantity of roses imported decreases from 10 million containers per year before the tariff to million per year after the tariff 197 198 CHAPTER 15 and a tariff of $25 per container is imposed The tariff revenue is equal to 10 million containers × $25 per container, which is $250 million and is illustrated in Figure 15.5 as the area of the grey rectangle If the United States puts an import quota on roses of million containers, what happens to the U.S price of roses, the quantity of roses bought, the quantity produced in the United States, and the quantity imported? The U.S price of roses rises to $150 per container million containers of roses are purchased in the United States and million containers of roses are produced in the United States The difference, million containers, is imported into the United States Who gains and who loses from this quota? U.S rose growers and importers of roses gain from the quota U.S rose wholesalers lose from the quota I N T E R N AT I O N A L T R A D E P O L I C Y 10 Draw a graph to illustrate the gains and losses from the import quota and on the graph identify the gains and losses, and the importers’ profit Figure 15.3 shows the effect of the import quota The amount of the quota is equal to the length of the grey arrow The price in the United States rises from $125 per container to $150 per container Before the import quota U.S rose producers grew million containers per year; after the import quota they increase their production to million containers per year This change is shown in the figure by the movement from point a to point b Before the import quota U.S rose wholesalers, the consumers in this problem, purchased 12 million containers per year; after the import quota they decrease their consumption to million containers per year This change is shown in the figure by the movement from point c to point d The quantity of roses imported decreases from 10 million containers per year before the import quota to million per year after the tariff U.S producers receive $150 per container while foreign producers receive the world price, $125 per container The difference, $25 per container, goes to the importers as added profit The total added profit is equal to 10 million containers × $25 per container, which is $250 million and is illustrated in Figure 15.5 as the area of the grey rectangle 11 Chinese Tire Maker Rejects Charge of Defects U.S regulators ordered the recall of more than 450,000 faulty tires The Chinese producer of the tires disputed the allegations and hinted that the recall might be an effort to hamper Chinese exports to the United States Source: International Herald Tribune, June 26, 2007 a What does the news clip imply about the comparative advantage of producing tires in the United States and China? Because the tires were produced in China, the news clip suggests that China has the comparative advantage in producing tires b Could product quality be a valid argument against free trade? If it could, explain how Product quality is not a valid argument against free trade Quality is a valid concern for consumers If consumers cannot judge quality themselves, then government inspection might be necessary But in that case government inspection of both imported and domestically produced goods is required To single out imported goods or services makes little sense By questioning the quality of tires, U.S producers create questions in the minds of U.S consumers regarding the safety of imported tires, thereby increasing the demand for domestically produced tires 199 200 CHAPTER 15 Answers to Additional Problems and Applications 12 Suppose that the world price of rice is 40 cents a kilogram, China does not trade internationally, and the equilibrium price of rice in China is 60 cents a kilogram China then begins to trade internationally a How does the price of rice in China change? The price of rice in China falls b Do Chinese consumers buy more or less rice? As a result of the lower price, Chinese consumers buy more rice c Do Chinese rice growers produce more or less rice? As a result of the lower price, Chinese growers produce less rice d Does China export or import rice and why? China imports rice The quantity of rice demanded increases while quantity supplied decreases The difference is made up by imports 13 Suppose that the world price of steel is $100 a ton, India does not trade internationally, and the equilibrium price of steel in India is $60 a ton India then begins to trade internationally a How does the price of steel in India change? The price of steel in India rises to equal the world price b How does the quantity of steel produced in India change? Producers respond to the higher price by increasing the quantity of steel produced c How does the quantity of steel bought by India change? Steel users in India respond to the higher price by decreasing the quantity of steel bought d Does India export or import steel and why? Because the price of steel in India is lower than the world, India has a comparative advantage in the production of steel India will export steel 14 A semiconductor is a key Price Quantity Quantity component in your laptop, cell (dollars demanded supplied phone, and iPod The table provides per unit) (billions of units per year) information about the market for 10 25 semiconductors in the United 12 20 20 States Producers of semiconductors 14 15 40 can get $18 a unit on the world 16 10 60 market 18 80 a With no international trade, what 20 100 would be the price of a semiconductor and how many semiconductors a year would be bought and sold in the United States? With no international trade the price of a semiconductor in the United States is $12 per unit 20 billion units are bought and sold in the United States b Does the United States have a comparative advantage in producing semiconductors? The United States has a comparative advantage in producing semiconductors because the U.S price is lower than the price in the world market I N T E R N AT I O N A L T R A D E P O L I C Y 15 America’s Oil Bonanza The shale revolution has increased the oil and gas flow in America tremendously The International Energy Agency has predicted that the United States would become the world’s largest oil producer by 2020, leaving Saudi Arabia and Russia behind Source: The Economist, November 17, 2012 a What is the effect of the shale revolution in the U.S on the world price of oil? The shale oil revolution increased the world supply of oil, thereby reducing its price b How does the change in the world price of oil affect the quantity of oil produced by members of the OPEC with a comparative advantage in producing oil, the quantity it consumes, and the quantity that it either exports or imports? The lower world price of oil increases the consumption of oil and decreases the production of oil in OPEC countries Because they have a comparative advantage they will export oil The lower price causes them to decrease their exports 16 Draw a graph of the market for corn in the poor developing country in Problem 15(b) to show the changes in the price of corn, the quantity produced, and the quantity consumed by people in that country In Figure 15.4, the initial world price of corn was $6 per bushel After the U.S and European policies, the world price rises to $8 per bushel The higher world price increases the production of corn Production moves from point a on the supply curve to point b; that is, production in the poor country increases from million bushels to million bushels Consumption of corn, however, decreases Consumption in the poor country moves from point c on the demand curve to point d; that is, consumption decreases from million bushels per year to million bushels 201 202 17 CHAPTER 15 South Korea to Resume U.S Beef Imports South Korea will reopen its market to most U.S beef South Korea banned imports of U.S beef in 2003 amid concerns over a case of mad cow disease in the United States The ban closed what was then the third-largest market for U.S beef exporters Source: CNN, May 29, 2008 a Explain how South Korea’s import ban on U.S beef affected beef producers and consumers in South Korea The South Korean ban raised the price of beef in South Korea The higher price led to increased production in South Korea, which made South Korean producers better off The higher price also led to decreased consumption in South Korea, which made South Korean consumers worse off b Draw a graph of the market for beef in South Korea to illustrate your answer to part (a) Identify the changes in the price of beef, the quantity produced, the quantity consumed, and the quantity imported Figure 15.8 shows the effect of South Korea’s import ban Prior to the ban the price of beef in South Korea was $4 per pound At this price the quantity consumed in South Korea was 12 million tons of beef per year (point b on the demand curve) and the quantity produced in South Korea was million tons of beef per year (point a on the supply curve) The difference, 10 million tons of beef per year, was imported from the United States With the import ban, the price of beef in South Korea rises to $6 per pound At this price million tons of beef per year are consumed in South Korea and million tons of beef per year are produced in South Korea (point c where the demand and supply curve cross) There are no imports 18.a Suppose that China is the only importer of Philippine banana, explain how tighter import controls on Philippine banana imposed by China could affect banana producers and consumers in the Philippines China’s tighter import controls meant that the Philippines no longer exported banana (Recall the assumption that China is the only importer of Philippine banana.) In the Philippines, the price of banana falls to the no-trade price The consumption in the Philippines increases and production in Philippines decreases so Philippine consumers are better off and Philippine producers are worse off I N T E R N AT I O N A L T R A D E P O L I C Y b Draw a graph of the market for banana in the Philippines to illustrate your answer to part (a) Identify the changes in consumer surplus, producer surplus, and deadweight loss Figure 15.9 shows the situation in the Philippine market for banana With trade, the price of banana is $4 per ton The Philippines produces 30 million tons of bananas, consumes 20 million tons of bananas, and exports the difference At this price consumer surplus in the Philippines is equal to area A and producer surplus is equal to area B+ area C+ area E When China eliminates Philippine exports, the price in the Philippines falls to $3.50 per ton, the no-trade price The Philippines consumer surplus increases from area A to area A+ area B Philippine producer surplus falls from area B+ area C+ area E to only area E The deadweight loss equals area C 203 204 CHAPTER 15 Use the following information to work Problems 19 to 21 Before 2015, trade between China and South Korea was subject to tariffs In 2015, China and South Korea signed a free trade agreement that aims to remove most barriers to trade between the countries 19 Explain how the price that Chinese consumers pay for goods from South Korea and the quantity of China imports from South Korea have changed Who are the winners and who are the losers from this free trade? With the free trade agreement, the prices that Chinese consumers pay for goods from South Korea will decrease and, as a result, the quantity of imports from South Korea will increase Winners from this free trade agreement are South Korean producers of goods exported to China and Chinese consumers of these goods Losers are South Korean consumers of the goods and Chinese producers of the goods 20 Explain how the quantity of Chinese exports to South Korea and the Chinese government’s tariff revenue from trade with South Korea have changed The prices of Chinese goods in South Korea will fall and, as a result, the quantity of Chinese goods exported to South Korea will increase The Chinese government’s tariff revenue from tariffs imposed on trade with South Korea will decrease 21 Suppose that in 2016 automobile producers in China lobby the Chinese government to impose an import quota on South Korean cars Explain who in China would gain and who would lose from such a quota Chinese automobile producers will gain from such a quota The importers who hold the quota rights will also gain Chinese consumers of cars will lose from such a quota Use the following information to work Problems 22 and 23 Suppose that in response to huge job losses in the U.S textile industry, Congress imposes a 100 percent tariff on imports of textiles from China 22 Explain how the tariff on textiles will change the price that U.S buyers pay for textiles, the quantity of textiles imported, and the quantity of textiles produced in the United States The tariff raises the U.S price of textiles As a result, the quantity of textiles consumed in the United States decreases and the quantity produced increases Imports of textiles into the United States decrease 23 Explain how the U.S and Chinese gains from trade will change Who in the United States will lose and who will gain? The decrease in trade means that the U.S and Chinese gains from trade decrease In the United States, U.S producers gain from the tariff The U.S government also gains revenue from the tariff U.S textile consumers lose Use the following information to work Problems 24 and 25 With free trade between Australia and the United States, Australia would export beef to the United States But the United States imposes an import quota on Australian beef 24 Explain how this quota influences the price that U.S consumers pay for beef, the quantity of beef produced in the United States, and the U.S and the Australian gains from trade The quota raises the price of beef in the United States By raising the U.S price, the quota increases the quantity of beef produced in the United States and decreases the quantity of beef consumed in the United States The U.S and Australian gains from trade decrease I N T E R N AT I O N A L T R A D E P O L I C Y 25 Explain who in the United States gains from the quota on beef imports and who loses U.S beef producers gain from the quota The people who hold the import quota rights also gain U.S beef consumers lose from the quota 205 206 26 CHAPTER 15 Trading Up The cost of protecting jobs in uncompetitive sectors through tariffs is high: Saving a job in the sugar industry costs American consumers $826,000 in higher prices a year; saving a dairy industry job costs $685,000 per year; and saving a job in the manufacturing of women’s handbags costs $263,000 Source: The New York Times, June 26, 2006 a What are the arguments for saving the jobs mentioned in this news clip? Explain why these arguments are faulty The arguments for saving these jobs are (explicitly) the argument that protection saves jobs and (implicitly) that protection allows us to compete with cheap foreign labor The fact these arguments are wrong can be demonstrated by comparing the cost of saving a job to the wage paid on the job The cost to U.S consumers of saving a job massively outweighs the benefit of a job to the worker, that is, the wage rate paid on the job This empirical result demonstrates the conclusion that the cost of protection to the losers, U.S consumers, exceeds the gain to the winners, U.S producers b Is there any merit to saving these jobs? There is merit to the workers whose jobs are saved and who might not receive any government assistance if their jobs are not protected There also is merit to the politicians who can obtain a reward from lobbyists for the protection There is no merit, however, to society as a whole Economics in the News Economics in the News 27 After you have studied Economics in the News on pp 428–429, answer the following questions a What is the TPP? The TTP is the Trans Pacific Partnership, a trade agreement among 12 nations b Who in the United States would benefit and who would lose from a successful TPP? U.S exporters of goods whose tariffs are reduced and U.S consumers of imported goods whose tariffs are reduced benefit from a successful TPP U.S consumers of exported goods whose tariffs are reduced and U.S producers of imported goods whose tariffs are reduced lose from a successful TPP The government might gain or lose tariff revenue depending on the magnitudes of the consumption and production changes c Illustrate your answer to part (b) with an appropriate graphical analysis assuming that tariffs are not completely eliminated Figure 15.7a (on the next page) shows the effect in the United States of lowering the U.S tariff on a good Initially the price in the United States was $90 per unit When the tariff is lowered, the price in the United States becomes $70 per unit Consumers gain and producers lose In this case, the government gains tariff revenue Figure 15.7b (on the next page) shows the effect in the United States of lowering the Japanese tariff on rice Initially the price in the United States was $300 per ton When the tariff is lowered so that the Japanese now import rice, the price in the United States rises to become the world price of $500 per ton U.S consumers lose because the price rises and their consumption decreases U.S producers gain because their production increases I N T E R N AT I O N A L T R A D E P O L I C Y d Who in Japan and other TPP nations would benefit and who would lose from a successful TPP? In other TPP nations and particularly in Japan, consumers of rice and other farm products would benefit from a successful TPP In other TPP nations and particularly in Japan, producers of rice and other farm products would lose from a successful TPP The Japanese government would lose tariff revenue e Illustrate with an appropriate graphical analysis who in Japan would benefit and who would lose from a successful TPP assuming that all Japan's import quotas and tariffs are completely eliminated Figure 15.8 shows the effect in Japan of eliminating Japan’s tariffs and import quotas Figure 15.8 shows the effect in the market for rice; the effect in other markets is similar Before the tariffs and import quotas are eliminated, the price in Japan was $700 per ton of rice After the tariffs and import quotas are removed, the price falls to the world price of $500 per ton of rice Japanese consumers gain because the price in Japan falls Japanese producers lose because of the fall in price The government loses because their tariff revenue is eliminated 207 208 28 CHAPTER 15 E.U Agrees to Trade Deal with South Korea Italy has dropped its resistance to a E.U trade agreement with South Korea, which will wipe out $2 billion in annual duties on E.U exports Italians argued that the agreement, which eliminates E.U duties on South Korean cars, would put undue pressure on its own automakers Source: The Financial Times, September 16, 2010 a What is a free trade agreement? What is its aim? A free trade agreement is an agreement among nations that they will not impose tariffs, quotas, or other protectionist policies on each other’s imports b Explain how a tariff on E.U car imports changes E.U production of cars, purchases of cars, and imports of cars Illustrate your answer with an appropriate graphical analysis The tariff that was imposed by the European Union decreased E.U imports of cars It raised the price of cars in the European Union, thereby increasing production of cars in the European Union and decreasing purchases of cars in the European Union In Figure 15.9, the world price is $20,000 per car and the E.U tariff is $2,500 per car The price in the European Union is $22,500 per car The quantity produced in the European Union is 20,000 cars per year and the quantity purchased is 42,333 per year so that 22,333 cars per year are imported If there was no tariff, so that the price in the European Union was equal to the world price, the quantity produced in the European Union would be 10,000 and the quantity purchased would be 60,000 so that 50,000 cars per year are imported c Explain who gains and who loses from this free-trade deal in cars In Figure 15.9, if the tariff is eliminated, the price in the European Union falls to $20,000 per car European car consumers gain and European ca producers loses European governments also lose tariff revenue d Explain why Italian automakers opposed cuts in car import tariffs Italian automakers opposed cuts in the tariff because they knew that if the tariff was cut, the price of cars in Italy would fall, thereby decreasing their producer surplus ... curve to point d; that is, consumption decreases from million bushels per year to million bushels 201 202 17 CHAPTER 15 South Korea to Resume U.S Beef Imports South Korea will reopen its market to. .. Problems 19 to 21 Before 2 015, trade between China and South Korea was subject to tariffs In 2 015, China and South Korea signed a free trade agreement that aims to remove most barriers to trade... area A to area A+ area B Philippine producer surplus falls from area B+ area C+ area E to only area E The deadweight loss equals area C 203 204 CHAPTER 15 Use the following information to work
- Xem thêm -

Xem thêm: Answers to review quizzes marcroeconomics 12e parkin chapter 15 , Answers to review quizzes marcroeconomics 12e parkin chapter 15

Gợi ý tài liệu liên quan cho bạn

Nhận lời giải ngay chưa đến 10 phút Đăng bài tập ngay