PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
Question
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Chapter 16.A, Problem 1P

(a)

To determine

Identify the equilibrium price and production of automobiles, if the economy is closed.

(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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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)
Steel is produced only in the US and the rest of the world (ROW). The inverse demand and supply in the US are p = 110 - Q8 and p = 20 + Qỗ, while in the ROW, they are p = 70 - Q and p = Qk. All quantities are in millions of tons and all prices are in dollars per ton. Since steel is produced more cheaply in the ROW, the US imports it from the ROW under international trade. At any price, p, the imports of the US, QM. is the excess demand for steel given by the difference between the quantity demanded and the quantity supplied domestically in the US: QM = Q% - Qi. Similarly, the exports of the ROw, QF, is the excess supply of steel given by the difference between how much they produce and how much they demand: QE = Qk - Qg. (b) Find the consumer and producer surplus in the US at the price p". consumer surplus $ million producer surplus million (c) The US government imposes a tax of $12 per unit on the ROw's exports. Find the new world equilibrium price, p**, and new world equilibrium…
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