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 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? 3. Does the United States gain from international trade in​honey? Do all Americans​gain? If​not, who​loses? Do the gains exceed the​losses?

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