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2464 Application: International Trade
64.
What are the arguments in favor of trade restrictions, and what are the counterarguments?
According to most
economists, do any of these arguments really justify trade restrictions?
Explain.
Problems
1.
Suppose in the country of Jumanji that the price of coffee with no trade allowed is below the world
price of coffee. If Jumanji allows free trade, will Jumanji be an importer or an exporter of coffee?
2.
Suppose in the country of Jumanji that the price of wheat with no trade allowed is above the world
price of wheat. If
Jumanji allows free trade, will Jumanji be an importer or an exporter of wheat?
3.
Suppose in the country of Nash that the price of corn is $4 per bushel with no trade allowed. If the
world price of
corn is $3 per bushel and if Nash allows free trade, will Nash be an importer or an
exporter of corn?
4.
Suppose in the country of Nash that the price of oranges is $8 per bushel with no trade allowed. If
the world price of
oranges is $10 per bushel and if Nash allows free trade, will Nash be an
importer or an exporter of oranges?
5.
A tax on an imported good is called a .
6.
A country has a comparative advantage in a product if the world price is than that country’s
domestic price without trade.
7.
Suppose the world price of coffee is $3 per pound and Brazil’s domestic price of coffee without
trade is $2 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of
coffee?
8.
Suppose the world price of coffee is $2 per pound and Brazil’s domestic price of coffee without
trade is $3 per pound. If Brazil allows free trade, will Brazil be an importer or an exporter of
coffee?
Figure 9-26
The following diagram shows the domestic demand and domestic supply curves in a market.
9.
Refer to Figure 9-26. With no trade allowed, what are the equilibrium price and equilibrium
quantity in this market?
10.
Refer to Figure 9-26. With no trade allowed, how much are consumer surplus, producer surplus,
and total surplus
in this market?
11.
Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free
trade, how many
units will domestic consumers demand, and how many units will domestic
producers produce?
12.
Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free
trade, will the
country import or export this good, and how many units will be imported/exported?
13.
Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free
trade, how much are
consumer surplus, producer surplus, and total surplus with trade?
14.
Refer to Figure 9-26. Suppose the world price in this market is $7. If the country allows free
trade, by how much
do consumer surplus, producer surplus, and total surplus change with trade?
Figure 9-27
The following diagram shows the domestic demand and supply curves in a market. Assume that
the world price in
this market is $20 per unit.
15.
Refer to Figure 9-27. With no trade allowed, what are the equilibrium price and equilibrium
quantity in this market?
16.
Refer to Figure 9-27. With no trade allowed, how much are consumer surplus, producer
surplus, and total surplus?
17.
Refer to Figure 9-27. If the country allows free trade, how many units will domestic consumers
demand and how
many units will domestic producers produce?
18.
Refer to Figure 9-27. If the country allows free trade, will the country import or export this
good, and how many
units will be imported/exported?
19.
Refer to Figure 9-27. If the country allows free trade, how much are consumer surplus,
producer surplus, and total
surplus with trade?
20.
Refer to Figure 9-27. If the country allows free trade, by how much do consumer surplus,
producer surplus, and
total surplus change with trade?
21.
Refer to Figure 9-27. Suppose the country imposes a $5 per unit tariff. If the country allows
trade with a tariff,
how much are consumer surplus, producer surplus, tariff revenue, and total
surplus?
22.
Refer to Figure 9-27. Suppose the country imposes a $5 per unit tariff. If the country allows
trade with a tariff,
how much is the deadweight loss caused by the tariff?
23.
Refer to Scenario 9-3. With no trade allowed, what are the equilibrium price and quantity in this
market?
24.
Refer to Scenario 9-3. With no trade allowed, how much are consumer surplus, producer
surplus, and total surplus
in this market?
25.
Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country
allows free trade, will
the country import or export this good, and how many units will be
imported/exported?
26.
Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country
allows free trade, how
much are consumer surplus, producer surplus, and producer surplus with
trade?
27.
Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit. If the country
allows free trade, by
how much do consumer surplus, producer surplus, and producer surplus
change?
28.
Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit, and suppose the
country imposes a $1
per unit tariff. If the country allows trade with a tariff, how much are
consumer surplus, producer surplus, tariff
revenue, and total surplus?
29.
Refer to Scenario 9-3. Suppose the world price in this market is $8 per unit, and suppose the
country imposes a $1
per unit tariff. If the country allows trade with a tariff, how much is the
deadweight loss caused by the tariff?
Application: International Trade 2475
Figure 9-28
The following diagram shows the domestic demand and domestic supply curves in a market.
30.
Refer to Figure 9-28. With no trade allowed, what are the equilibrium price and equilibrium
quantity in this market?
31.
Refer to Figure 9-28. With no trade allowed, how much are consumer surplus, producer surplus,
and total surplus
in this market?
32.
Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free
trade, how many
units will domestic consumers demand, and how many units will domestic
producers supply?
33.
Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free
trade, will the
country import or export this good, and how many units will be imported/exported?
34.
Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free
trade, how much is
consumer surplus?
35.
Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free
trade, how much is
producer surplus?
36.
Refer to Figure 9-28. Suppose the world price in this market is $6. If the country allows free
trade, how much is
total surplus?
Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a market.
Assume that the world
price in this market is $1 per unit.
37.
Refer to Figure 9-29. With no trade allowed, what are the equilibrium price and equilibrium
quantity in this market?
38.
Refer to Figure 9-29. With no trade allowed, how much are consumer surplus, producer
surplus, and total surplus?
39.
Refer to Figure 9-29. If the country allows free trade, how many units will domestic consumers
demand and how
many units will domestic producers supply?
40.
Refer to Figure 9-29. If the country allows free trade, will the country import or export this
good, and how many
units will be imported/exported?
41.
Refer to Figure 9-29. If the country allows free trade, how much are consumer surplus,
producer surplus, and total
surplus with trade?
42.
Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows
trade with a tariff,
what will be the domestic price in this market?
43.
Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows
trade with a tariff,
how many units will domestic consumers demand and how many units will
domestic producers supply?
44.
Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows
trade with a tariff,
how many units will be imported?
45.
Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows
trade with a tariff,
how much are consumer surplus and producer surplus?
46.
Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows
trade with a tariff,
how much is tariff revenue?
47.
Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows
trade with a tariff,
how much is total surplus?
48.
Refer to Figure 9-29. Suppose the country imposes a $1 per unit tariff. If the country allows
trade with a tariff,
how much is the deadweight loss caused by the tariff?
49.
List four benefits of international trade.
50.
List five arguments given to support trade restrictions.
