Macroeconomics
13th Edition
ISBN: 9780134744452
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 15, Problem 21APA
To determine
Identify the losers and gainers in international trade.
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Students have asked these similar questions
Georgia and Moldova are famous for their quality of wine and the United Kingdom decides to
start importing from them. There is an 5£ tariff on imported wine. Considering the graph
below, where does the UK buy its wine from and how much does it cost on the domestic
market?
Price per bottle
£10
£7
Moldovan price
£5
Georgian price
UK demand for imported wine
Quantity
(millions of bottles per year)
10
15
22
Suppose the UK joins a trade bloc with Moldova and maintains its 5£ tariff on wine from
outside the bloc.
a) What will the new domestic price be?
b) How much do consumers gain/lose?
c) How about the government?
d) Is there trade creation or trade dıversion or both?
e) How much does the UK gain/lose?
Vietnam has a policy of free trade in motorcycles which are sold in world markets at a price of 10,000 per motorcycle.
Under free trade, Vietnam produces 100,000 motorcycles and imports 100,000 motorcycles. To provide some protection
to the domestic industry, Vietnam imposes an import tariff of $1500 per motorcycle. With this tariff in place, production
in Vietnam rises by 5,000 motorcycles and consumption drops by the same amount. Calculate the effects of the tariff on:
a. Consumer Surplus b. Producer Surplus c. Government Revenues d. Overall Welfare e. If the tariff imposed by the
Vietnamese had led to small reduction in world prices of, say, 250 dollars, how, qualitatively, would the welfare
calculations (a), (b), (c) and (d) above change?
Homework (Ch 09)
4. Effects of a tariff on international trade
The following graph shows the domestic supply of and demand for soybeans in Colombia. The world price (Pw) of soybeans is $545 per ton and is
represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the worl
price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domes
suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.
860
Domestic Demand
Domestic Supply
825
790
755
O 720
685
650
615
580
Pw
545
510
90
120
150
180
210
240
270
300
30
60
QUANTITY (Tons of soybeans)
PRICE (Dollars per ton)
Chapter 15 Solutions
Macroeconomics
Ch. 15.1 - Prob. 1RQCh. 15.1 - Prob. 2RQCh. 15.2 - Prob. 1RQCh. 15.2 - Prob. 2RQCh. 15.2 - Prob. 3RQCh. 15.3 - Prob. 1RQCh. 15.3 - Prob. 2RQCh. 15.3 - Prob. 3RQCh. 15.3 - Prob. 4RQCh. 15.3 - Prob. 5RQ
Ch. 15.4 - Prob. 1RQCh. 15.4 - Prob. 2RQCh. 15.4 - Prob. 3RQCh. 15.4 - Prob. 4RQCh. 15.4 - Prob. 5RQCh. 15 - Prob. 1SPACh. 15 - Prob. 2SPACh. 15 - Prob. 3SPACh. 15 - Prob. 4SPACh. 15 - Prob. 5SPACh. 15 - Prob. 6SPACh. 15 - Prob. 7SPACh. 15 - Prob. 8SPACh. 15 - Prob. 9SPACh. 15 - Prob. 10SPACh. 15 - Prob. 11SPACh. 15 - Prob. 12APACh. 15 - Prob. 13APACh. 15 - Prob. 14APACh. 15 - Prob. 15APACh. 15 - Prob. 16APACh. 15 - Prob. 17APACh. 15 - Prob. 18APACh. 15 - Prob. 19APACh. 15 - Prob. 20APACh. 15 - Prob. 21APACh. 15 - Prob. 22APACh. 15 - Prob. 23APACh. 15 - Prob. 24APACh. 15 - Prob. 25APACh. 15 - Prob. 26APACh. 15 - Prob. 27APACh. 15 - Prob. 28APA
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