(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $1,000, the value of the domestic producer surplus is: Price 2,000 1,000 500 Domestic supply Domestic demand 1,000 Quantity of engines
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- 3. Consumer surplus and producer surplus from market exchange Consider the Venezuelan market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Venezuela. Suppose Venezuela's government currently does not allow the international trade in soybeans. Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity of soybeans in Venezuela in the absence of international trade. Then, use the green point (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple point (diamond symbol) to shade the area representing producer surplus in equilibrium. Note: Select and drag a fill area point from the palette to the graph. To fill in regions on the graph, merely drop the fill area point on the desired region. 550 Domestic Demand Domestic Supply 525 No Trade Equilibrium 500 A 475 450 Consumer Surplus 425 400 Producer Surplus 375 350 325 300 40 80…4. Assume that supply for replacement mobile phone batteries in the Australian domestic market is given by the inverse-supply expression P = 9+0.000010s, while inverse demand is P = 19 -0.00001QD. The world price for batteries is $10. (a) Find the equilibrium price and quantity in the market for replacement mo- bile phone batteries if Australia does not engage in any international trade. Compute the consumer surplus, the producer surplus, and the total surplus in the market. (b) Now assume that Australia trades on the world market for batteries, exporting or importing batteries depending on the relation between the world and domestic prices. Find the price at which batteries will be sold in Australia, the quantity purchased, the quantity produced, and the quantity of imports or exports. Compute the consumer surplus, the producer surplus, and the total surplus in the market, as well as the gains from trade relative to part (a). (c) The Australian government imposes a $2 tariff on the…The figure below illustrates the impact of an export subsidy as imposed by a large country. No imports are permitted. Price D D₁ O (b+c+d) O (b+c+d+f+g+h+i+j) O(a+b+c+d+e+f+g+h+i+j) 0 (c + h) Sa S₁ The cost to the government of the indicated export subsidy is shown by area(s) Price D D Da The figure below illustrates the impact of an export subsidy as imposed by a large country. No imports are permitted. Sp St Domestic price with subsidy World price "World price with subsidy Quantity Da Domestic price with subsidy World price World price with subsidy Quantity What is the net impact on the consumer surplus of the export subsidy provided by the domestic government? O The consumer surplus increases by area (a+b+c). O The consumer surplus falls by area (a + b +e+f+g). The consumer surplus increases by area a, O The consumer surplus falls by area (a + b).
- Suppose that Estonia, which is a"small economy, and it can import plastic chairs at a price of 20 per unit The domestic supply curve of plastic chairs is the following: S=40+10P And the demand curve in Estonia for plastic chairs is: D=800-5P In addition, each unit of plastic chair production yields a marginal social benefit of 10. a) Calculate the total effect on welfare of a tariff of 15 per unit levied on imports. Only typed answerOne reason why consumers are unlikely to be too upset about tariffs O tariffs are an inexpensive way to create jobs. O most consumers benefit from protection. O the costs are so spread out that no one pays a big share of the total. O consumer losses are not real losses.Refer to the figure at right showing the market for cheese. The increase in domestic producer surplus associated with the tariff shown will be S. (Round your response to the nearest dollar.) Price of Cheese ($) Market for Cheese Pw+t=26 P₁ = 20 D B 8 14 22 30 Quantity of Cheese (thousand units) S D M
- 16. What is the difference between an agricultural export subsidy and an agricultural production subsidy?Explain how a subsidy on agricultural goods like sugar adversely affects the income of foreign producers of imported sugar.The figure below represents the domestic market for wheat in a small country. Imports of wheat are prohibited. Price ($ per bushel) Sa (domestic supply curve) $180 $160 World price Da (domestic demand curve) 150 Quantity (millions of bushels) 40 60 120 With an export subsidy of $20 per bushel, the production effect of the export subsidy amounts to $1 billion. $2.2 billion. O $300 million. $200 million.
- 0 suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place 905Domestic Demand Domestic Supply 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of soybeans) If Colombia is open to international trade in soybeans without any restrictions, it will import tons of soybeans Suppose the Colombian government wants to reduce imports to exactly 100 tons of soybeans to help domestic producers. A tariff of $ 0 will achieve this A tariff set at this level would raise $ in revenue for the Colombian governmentYou are provided with the following information about the Canadian turkey market:1. The world price of turkey is $5.2. The Canadian turkey market is currently (before the new trade agreement) protected by a tariffrate quota (TRQ) of the following format:a) the in-quota tariff is $1 per unitb) the import quota volume is 100 unitsc) the over-quota tariff is $10 per unit.3. An excess demand (ED) (for imports) function for turkey has been estimated as? = 28 − 0.14?. Notes: Canada is a small importing country in the world market for turkeys. Answer the question below: The Canadian government is considering reducing the in-quota tariff to $0.50. Modify the diagram for this market, and solve for the Canadian turkey price and the volume of imports. Label all relevant functions, axes, etc.PRICE (Dollars per tonne) 800 Domestic Demand 750 700 650 600 550 500 450 400 350 300 0 Domestic Supply 40 80 120 160 200 240 280 320 360 400 QUANTITY (Thousands of tonnes of tangerines) No Trade Equilibrium A Consumer Surplus ◇ Producer Surplus Based on the previous graph, total surplus in the absence of international trade is the graph.) $25 million. (Hint: Take note of the units on the axes of The following graph shows the same domestic demand and supply curves for tangerines in Guatemala presented in the previous graph. Suppose that the Guatemalan government changes its international trade policy to allow free trade in tangerines. The horizontal black line (Pw) represents the world price of tangerines at $500 per tonne. Assume that Guatemala's entry into the world market for tangerines has no effect on the world price and that there are no transportation or transaction costs associated with international trade in tangerines. Also assume that domestic suppliers will satisfy domestic…
