Policies that provide subsidies to domestic producers to encourage the production of goods for domestic market and reduce the quantity of imports are called import substitution policies. Select one: True False
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Policies that provide subsidies to domestic producers to encourage the production of goods for domestic market and reduce the quantity of imports are called import substitution policies.
Select one:
True
False
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- The market for pencils has a domestic demand equation P=20−0.5Q�=20−0.5�, and a domestic supply equation P=5+Q�=5+�, where quantity is measured in thousands. The world supply equation for pencils is PW=10��=10. The domestic government decides to implement a tariff of $10 per thousand pencils. As a result of the tariff, the new domestic price of pencils isWithout trade, consumer surplus isChina’s entry into the World Trade Organization (WTO) in 2001 created more competition between local and foreign firms, and also provided China greater access to the market for exports. This was particularly true in the market for rubber since, at the time, China was the world’s second largest consumer of rubber (China is now the world’s largest consumer of rubber). Shortly after joining the WTO, China eliminated its import quota on rubber. What impact do you think the import quota reduction likely had on the price of rubber and the quantity of rubber exchanged in China? What implications do you think the elimination of the quota on rubber had on China’s social welfare?
- Suppose a small country Wakanda exports only vibranium and adamantium. These two industries employ 50% of the population of Wakanda. Export is equal to 40% of Wakanda's GDP. 40% of all the export revenue Wakanda obtains from adamantium. Other things being equal, if the price of adamantium on the world market goes down by 10%, by how much Wakanda's welfare will change?Which of the following would help to reduce imports? Select one: a) A fall in quotas b) Increased borrowings c) Fall in subsidy to domestic firms d) A fall in tariffs e) Decreased import substitutionIndicate the impact of subsidies on the following: Imports: (Increase/Decrease) Prices: (Increase/Decrease) Consumption: (Increase/Decrease) Consumers: (Better off/No change/Worse off) Domestic producers: (Better off/No change/Worse off) Competitiveness of domestic producers at home: (Improved/Unchanged/Deteriorated) Competitiveness of domestic producers in international markets: (Improved/Unchanged/Deteriorated) Government: (Better off/No change/Worse off)
- Price 0 C H Quantity Refer to the diagram pertaining to two nations and a specific product. Lines FA and GB are Multiple Choice export supply curves for two countries. import demand curves for two countries. domestic demand curves for two countries. domestic supply curves for two countries."The Chinese government uses subsidies for a variety of purposes, and subsidies come in a variety of forms. Tax subsidies, preferential loans, and grants are the most common form of subsidy. The government also provides favorable input prices and transfers assets to favored firms at prices that are below market value. Chinese subsidies are both practical and strategic. Practical subsidies reward companies for accomplishing a social policy goal, such as investing in disadvantaged regions to alleviate unemployment. Strategic subsidies are those that seek to advance the overall economic well-being of the country by earning foreign exchange, promoting technological development, developing an industry that the government views as being important, or otherwise enhancing China's industrial competitiveness. In competitive international markets, such subsidies would be expected to increase economic activity of favored industries in China relative to activity in the United States. This means…Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and Dk is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 120,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 120,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 40 80 120 160 200 SK 240 10 0² W 280 320 360 400 SK+Q Price with Quota A Change in PS Quota Rents DWL ?
- Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and DK is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 60,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota Sk+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 60,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 20 SK K P W 40 60 80 100 120 140 160 180 200 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for…You are the economic advisor of Country X. The president of Country X wants to adopt the free market economic system and has come to you for advice. The price of rice has been increasing rapidly in Country X. Discuss all the possible ways Country X can tackle (manage) the problem of increasing price of rice. No need to draw diagrams in this answer.The graph depicts the market for oil, with the assumption that the United States can import any amount of oil it chooses at the world free trade price. Adjust the graph to reflect what happens when a 50% import tax is imposed on oil. Approximately how many million barrels are imported before the tax is imposed?