International economicsproblem set | Economics homework help - Vintage-paper.com

Short Answer1. What is the diﬀerence between free-trade areas and customs unions?2. How do consumer and producer surplus add to a country’s welfare?3. Deﬁne deadweight loss.4. What is a terms-of-trade gain?5. Deﬁne quota rents. Problem Solving1. Aoslia is a small country that takes the world price of corn as given. Its domestic supply and demand for corn is given by the following:D = 45 − 3PS = 3P − 9(a) Assume initially that Aoslia does not open to trade. What is the autarky equilibrium price and quantity?(b) Suppose Aoslia decides to engage in trade. Determine the quantity demanded, quantity supplied, and import given the world price of $6 per bushel of corn.(c) If the Aoslia government imposes a tariﬀ in the amount of $1 (i. e. , t = $1), what is the new domestic price? What is the amount imported?(d) Determine the eﬀect of the tariﬀ on the Aoslian consumers, producers, and the government.(e) Calculate the terms-of-trade gain. What is the net eﬀect of the tariﬀ on Aoslia’s welfare? Explain2. Refer to the above problem. Suppose the Aoslian government applies an import quota that limits imports to 12 bushels of corn.(a) Determine the quantity demanded, quantity supplied, and the new domestic price with the quota.(b) Calculate the quota rent.(c) Assuming that the quota licenses are allocated to domestic producers, what is the net eﬀect of the quota on Aoslia’s welfare?(d) Assuming that the quota rents are earned by foreign exporters, what is the net eﬀect of the quota on Aoslia’s welfare? PS 02A (Trade Policy Instruments)—Page 1 of 3Do not duplicate or distribute. Do not duplicate or distribute. Do not duplicate or distribute. Econ-4040-001 14SSInternational EconomicsProblem Set 02A (Trade Policy Instruments) (a) Assume that the world price is P W = $5. Determine the consumer and producer surplus under free trade.(b) Suppose the Home government imposes a tariﬀ in the amount of $4 (i.e., t = $4). What is the new Home price? What is the price received by the foreign exporters?(c) Determine the terms of trade for Home with the tariﬀ.(d) Does Home welfare increase or decrease due to the tariﬀ? Explain.4. Refer to the problem above. At what amount would the tariﬀ be considered prohibitive? Explain Web Links1. In September 2009, in a move intended to assist the domestic tire industry, President Obama imposed tariﬀs on tires imported from China. The positions of supporters and opponents of the measure are available in the Washington Post article “U.S. to Impose Tariﬀ on Tires From China,” Sept. 12, 2009 at http://www.washingtonpost.com/wp-dyn/content/article/2009/09/ 11/AR2009091103957.html.According to the article, how many jobs were lost from 2004 to 2009 in the U.S. tire industry?2. Further information on the Multiﬁbre Arrangement can be found at http://www.wto.org/ english/tratop e/texti e/texintro e.htm

International economicsproblem set | Economics homework help

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