Econ 2301 - Chapter 15
The table shows the U.S. demand schedule for honey and the supply schedule of honey by U.S. producers. The world price of honey is $8 a jar. 1. With no international trade, what is the price of honey and the quantity bought and sold? The price of honey is $____ a jar and ___ millions jars of honey are bought per year. Does the United States have a comparative advantage in producing honey? With free trade, does the United States export or import honey? The United States _____ a comparative advantage in producing honey, and with free international trade the United States _____ honey. 2. With free internationaltrade, what is the U.S. price ofhoney, the quantity bought byAmericans, the quantity produced in the UnitedStates, and the quantity of honey exports orimported? 3. Does the United States gain from international trade inhoney? Do all Americansgain? Ifnot, wholoses? Do the gains exceed thelosses?
1. https://photos.app.goo.gl/UED1dimFVapnaKsQ9 2. https://photos.app.goo.gl/tmKzMKLtge21Fpeb9 3. The United States gains from international trade because HONEY PRODUCERS GAIN MORE THAN HONEY CONSUMERS LOSE.
Choose the statement that is incorrect. A. With the tariff, part of the higher price paid to domestic producers pays the higher cost of domestic production. B. With the tariff, the increased domestic production could have been obtained at a lower cost as an import. C. A tariff creates a social loss from the decreased quantity of the good consumed at the higher price. D. A tariff creates a social loss because the domestic government loses revenue.
A tariff creates a social loss because the domestic government loses revenue.
______ that we buy from people in other countries and ______ that we sell to people in other countries.
Imports are the goods and services; exports are the goods and services
With an import quota, society loses because the loss to consumers exceeds the gains of domestic producers and importers.
TRUE
With international trade between Australia and the United States, Australia would export beef to the United States. But the United States imposes an import quota on Australian beef. Explain who in the United States gains from the quota on beef imports and who loses. ______ of beef gain from the import quota on beef. ______ lose from the import quota on beef.
U.S. beef producers, workers in the U.S. beef industry, and U.S. importers; U.S. consumers
Wholesalers buy and sell roses in containers that hold 120 stems. The table provides information about the wholesale market for roses in the United States. The demand schedule is the wholesalers' demand and the supply schedule is the U.S. rose growers' supply. Wholesalers can buy roses at auction in Aalsmeer, Holland for $125 per container. If the United States puts an import quota on roses of 5 million containers, what happens to the U.S. price of roses, the quantity of roses bought, the quantity produced in the United States, and the quantity imported?
With the import quota, the U.S. price of roses is $150 a container The quantity of roses bought is 9 million containers and the quantity produced in the United States is 4 million containers. The quantity imported into the United States is 5 million containers
Car Sales Go Up as Prices Tumble Car affordability in Australia is now at its best in 20 years, fueling a surge in sales as prices tumble. In 2000, Australia cut the tariff to 15 percent and on January 1, 2005, it cut the tariff to 10 percent. Source: Courier Mail, February 26, 2005 Who gains and who loses from the lower tariff on imported cars? With a lower tariff on imported cars, Australian ______ lose. With a lower tariff on imported cars, ______ in the rest of the world gain.
consumers gain and Australian producers and the government; producers
Protection _______.
does not save jobs and the environment and does not prevent workers in developing countries from being exploited
We _______ items in which we have a comparative advantage.
export
The graph shows the market for roses in the United States. The demand curve is the wholesalers' demand curve and the supply curve is the U.S. rose growers' supply curve. The world price is $125 per container. With international trade, wholesalers ______ and rose growers ______. Draw a point on the graph to show the price and quantity of roses bought in the United States with no international trade. Label it 1. Draw a point to show the price and quantity of roses bought in the United States with international trade. Label it 2. Draw a point to show the price and quantity sold by U.S. rose growers with international trade. Label it 3.
gain; lose https://photos.app.goo.gl/r8gkiwdbALW8yUR39
Wholesalers buy and sell roses in containers that hold 120 stems. The table provides information about the wholesale market for roses in the United States. The demand schedule is the wholesalers' demand and the supply schedule is the U.S. rose growers' supply. Wholesalers can buy roses at auction in Aalsmeer, Holland, for $125 per container. If U.S. wholesalers buy roses at the lowest possible price, how many do they buy from U.S. growers and how many do they import? If U.S. wholesalers buy roses at the lowest possible price, they buy ____ million containers from U.S. growers and they import ____ million containers.
graph given: https://photos.app.goo.gl/eYY28Ejy6YgKx4hK6 lowest possible price is to buy 2 million containers for 125. But at that price there is a demand of 12 million so they must import 10 million containers.
Domestic consumers of the exported good pay a ______ price and purchase a _______ quantity of it.
higher; smaller
Car Sales Go Up as Prices Tumble Car affordability in Australia is now at its best in 20 years, fueling a surge in sales as prices tumble. In 2000, Australia cut the tariff to 15 percent and on January 1, 2005, it cut the tariff to 10 percent. Source: Courier Mail, February 26, 2005 The graph shows the car market in Australia prior to the cuts in the tariff. Draw an arrow on the Price in 1999 line to show imports. Label it Imports in 1999. Draw the price line in 2005 after the tariff cuts. Label it Price in 2005. Draw a point to show the quantity bought in Australia and the price after the tariff cuts. Label it 1. Draw a point to show the quantity produced in Australia after the tariff cuts. Label it 2. Draw an arrow on the Price in 2005 line to show imports. Label it Imports in 2005.
https://photos.app.goo.gl/8qXo6fmmwDzHxLsr6
Underwater Oil Discovery to Transform Brazil into a Major Exporter A huge underwater oil field discovered late last year has the potential to transform Brazil into a sizable exporter. Fifty years ago, Petrobras was formed as a trading company to import oil to support Brazil's growing economy. Two years ago, Brazil reached its long-sought goal of energy self-sufficiency. Source: International Herald Tribune, January 11, 2008 The graph shows the demand for oil in Brazil and the world price line. Draw Brazil's supply of oil curve when Brazil is an importer of oil. Label it S1. Draw a point to show the quantity of oil produced in Brazil and the price when Brazil imports oil. Label it 1. Draw a horizontal arrow that shows the quantity of oil imported. Label it Imports. Draw Brazil's supply of oil curve when Brazil is an exporter of oil. Label it S2. Draw a point to show the quantity of oil produced in Brazil and the price when Brazil exports oil. Label it 2. Draw a horizontal arrow that shows the quantity of oil exported. Label it Exports.
https://photos.app.goo.gl/CajSTDwGgDadb6qZA
Click on the icon to read the news clip, then answer the following questions. The graph shows the U.S. steel market when a tariff is imposed. Draw a point to show the quantity of steel bought by U.S. consumers with no tariff. Label it 1. Draw a point to show the quantity of steel bought by U.S. consumers when a tariff is applied. Label it 2. Draw a point to show the quantity of steel produced by U.S. steelmakers with no tariff. Label it 3. Draw a point to show the quantity of steel produced by U.S. steelmakers with a tariff. Label it 4.
https://photos.app.goo.gl/NZoLw15ZyUinqT5m6
Wholesalers buy and sell roses in containers that hold 120 stems. The table provides information about the wholesale market for roses in the United States. The demand schedule is the wholesalers' demand and the supply schedule is the U.S. rose growers' supply. Wholesalers can buy roses at auction in Aalsmeer, Holland for $125 per container. If the United States puts a tariff of $25 per container on imports of roses, explain how the U.S. price of roses, the quantity of roses bought, the quantity produced in the United States, and the quantity imported change.
https://photos.app.goo.gl/NevaLXMR1PmszZKy8 With the tariff, the U.S. price of roses is $150 a container. The quantity of roses bought in the United States is 9 million containers and the quantity produced in the United States is 4 million containers. The quantity imported into the United States is 5 million containers. With the tariff on imports of roses, U.S.____ gain and U.S.____ lose from the tariff. --> rose growers and the U.S. government; wholesalers
A New Food Crisis Is on Our Plates Over the past year the price of corn has risen 52 percent, wheat 49 percent, and soybeans 28 percent. Alarmed at spiking food prices, a score of countries, including Russia and Ukraine, have banned food exports to make sure they can feed their own people first. Source: Sydney Morning Herald, February 22, 2011 The graph shows the market for a country that exports food. Suppose the country restricts its food exports to the point that it exports zero food. Draw a point to show the price and the quantity of food produced when the country exports food. Label it 1. Draw an arrow to show the change in price and the quantity of food produced when the country moves from exporting food to exporting no food. Label it 2. Draw a point to show the price and quantity of food consumed when the country exports food. Label it 3. Draw an arrow to show the change in price and the quantity of food consumed when the country moves from exporting food to exporting no food. Label it 4.
https://photos.app.goo.gl/QTe6nRFAu65hCoor6
The graph shows the quantity of vitamins demanded and supplied in the United States. The world price of a bottle of vitamins is $10. Suppose the United States imposes an import quota of 50 million bottles of vitamins a year. Draw a line that shows the effect of the import quota on supply. Label it. Draw a point that shows the effect of the import quota on: 1) the quantity of vitamins bought in the United States and the price of a bottle of vitamins. Label it 1. 2) the quantity of vitamins produced in the United States and the price of a bottle of vitamins. Label it 2. With an import quota, the quantity of vitamins imported into the United States ____________ by _____ million bottles a year. With an import quota, domestic production ________________ and consumption _________________.
https://photos.app.goo.gl/RLDVEG4PVT9iu68w6 With an import quota, the quantity of vitamins imported into the United States DECREASES by 50 million bottles a year. With an import quota, domestic production INCREASES and consumption DECREASES.
The table shows the U.S. demand schedule for honey and the supply schedule of honey by U.S. producers. The world price of honey is $8 a jar. 2. With free international trade, what is the U.S. price of honey, the quantity bought by Americans, the quantity produced in the United States, and the quantity of honey exports or imported? With free international trade, the U.S. price of honey is $___ a jar, Americans buy ___ million jars a year, the United States produces ___ million jars a year. The United States exports ___ million jars of honey a year.
https://photos.app.goo.gl/RushSBLvQKF9oRFRA With free international trade, the U.S. price of honey is $8 a jar, Americans buy 4 million jars a year, the United States produces 9 million jars a year.The United States exports 5 million jars of honey a year.
The graph shows the market for roses in the United States when a tariff is imposed. Draw a point to show the quantity of roses bought by U.S. wholesalers with no tariff. Label it 1. Draw a point to show the quantity of roses bought by U.S. wholesalers when a tariff is applied. Label it 2. Draw a point to show the quantity of roses produced by U.S. rose growers with no tariff. Label it 3. Draw a point to show the quantity of roses produced by U.S. rose growers with a tariff. Label it 4. The tariff revenue is $______ million.
https://photos.app.goo.gl/UtDKXsXytDvBLk618 125 million
The graph shows Mexico's demand for and supply of mangoes. Draw the world price line when the world price of mangoes is $1.00 a pound. Label it World price. Suppose that the government of Mexico imposes a tariff of $0.50 a pound on mangoes imported into Mexico. Draw a line to show the price of mangoes in Mexico. Label it World price + tariff. Draw a point at the quantity of mangoes demanded by Mexican consumers 1) at the world price. Label it 1. 2) at the price in Mexico following the tariff. Label it 2. Draw a point at the quantity of mangoes supplied by Mexican producers 3) at the world price. Label it 3. 4) at the price in Mexico following the tariff. Label it 4.
https://photos.app.goo.gl/abcdb9QTdhQ52xK16
The graph shows the market for roses in the United States. The demand curve shows the wholesalers' demand and the supply curve shows the U.S. rose growers' supply. The United States moves from free trade in roses to a market with an import quota. Draw a point to show the price and quantity demanded with free international trade. Label it 1. Draw a point to show the price and quantity demanded with the quota. Label it 2. Draw a point to show the price and quantity supplied by U.S. rose growers with no quota. Label it 3. Draw a point to show the price and quantity supplied by U.S. rose growers with the quota. Label it 4. Draw a shape to show the importers' profit.
https://photos.app.goo.gl/tRKtVPSiG9fm2m2c6
The graph shows the wholesale market for roses in the United States. The demand curve is the wholesalers' demand curve and the supply curve is the U.S. rose growers' supply curve. Wholesalers can buy roses at auction in Aalsmeer, Holland, for $125 per container. Draw a point at the equilibrium in the market with no international trade. Label it 1. Draw a horizontal line at the world price. Label it. Draw a point at the quantity bought in the United States with free trade. Label it 2. Draw a point at the quantity produced in the United States with free trade. Label it 3. Draw a horizontal arrow that shows the quantity of roses imported into the United States and the price with free trade.
https://photos.app.goo.gl/yUAyqoFaGp925kTj8
Biofuel Goals Could Require All the World's Crops Biofuels to combat global warming and cut carbon emissions are diverting corn from food to fuel, and a World Resources Institute report says meeting a 20 percent bioenergy target in 2050 would need the world's annual harvest of plant material to double. Source: CBS News, January 29, 2015 What is the effect on the world price of corn of the increased use of corn to produce biofuel? How does the change in the world price of corn affect the quantity of corn produced in a poor developing country with a comparative advantage in producing corn, the quantity it consumes, and the quantity that it either exports or imports? The increased use of corn to produce biofuel _______ the world price of corn. The graph shows the demand for and supply of corn in a poor developing country. Draw the world price line if the country has a comparative advantage in producing corn. Label it World price. Draw a new world price line that shows the effect of the increased use of corn to produce biofuel. Label it New world price. Draw an arrow along the appropriate curve that shows: 1) the change in the quantity of corn consumed when the world price changes. Label it 1. 2) the change in the quantity of corn produced when the world price changes. Label it 2. When the world price rises, this country ______ corn.
increases graph: https://photos.app.goo.gl/HDcdy59cszLyKz55A exports more
The infant-industry argument for protection is that ______. Dumping occurs when ______. The infant-industry and the dumping arguments for protection are _______.
it is necessary to protect a new industry to enable it to grow into a mature industry that can compete in world markets a foreign firm sells its exports at a lower price than its cost of production incorrect because free trade promotes prosperity for all countries and protection is inefficient
The main reasons for imposing a tariff are _______.
tariff revenue and rent seeking
When the U.S. government imposes an import quota, all of the following are true except _______.
the U.S. government gains
When a country opens up to free international trade, domestic producers of the exported good ______ and domestic consumers of the exported good ______.
win; lose
A New Food Crisis Is on Our Plates Over the past year the price of corn has risen 52 percent, wheat 49 percent, and soybeans 28 percent. Alarmed at spiking food prices, a score of countries, including Russia and Ukraine, have banned food exports to make sure they can feed their own people first. Source: Sydney Morning Herald, February 22, 2011 What are the benefits to a country from importing food? What costs might arise from relying on imported food? The benefits to a country of importing food are that the price of food ______, and the quantity of food bought in the importing country ______. When a country relies on imported food, the country _______.
falls; increases can face food restrictions in times of global food shortages because producers will restrict exports
When a country opens up to free international trade, domestic producers of the exported good receive a ______ price and sell a ______ quantity of it.
higher; greater
Steel Tariffs Appear to Have Backfired on Bush President Bush set aside his free-trade principles last year and imposed heavy tariffs on imported steel to help out struggling mills in Pennsylvania and West Virginia. Some economists say the tariffs may have cost more jobs than they saved, by driving up costs for automakers and other steel users. Source: The Washington Post, September 19, 2003 Explain how a high tariff on steel imports can help domestic steel producers. Explain how a high tariff on steel imports can harm steel users. When a high tariff is placed on steel imports, U.S. steel producers produce ______ steel and they receive a ______ price. When a high tariff is placed on steel imports, U.S. steel users consume ______ steel and they pay a ______ price.
more; higher less; higher
Suppose that the world price of tomatoes is 60 cents a pound, the United States does not trade internationally, and the equilibrium price of tomatoes in the United States is 40 cents a pound. The United States then begins to trade internationally. The price of tomatoes in the United States ______. U.S. consumers buy ______ tomatoes. The United States ______ tomatoes. ______ gain from international trade in tomatoes. ______ lose from international trade in tomatoes. The United States __________ tomatoes.
rises; fewer tomatoes and U.S. firms produce more; exports U.S. producers; U.S. consumers exports