Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Business Economics Expert

Economics


Home >> Business Economics

Suppose that the domestic demand and supply for books in a small open economy are given by:

Qd = 80 - 3P

Qs = 20 + 3P

where P denotes price and Q denotes quantity. Show all calculations for full credit.

A) What is the autarky price and quantity of books produced?

B) Assume the world price of books is $6. If this country opens its market to free trade, what are the domestic production (supply), the domestic consumption (demand) and the quantity of imports?

C) Suppose that the country imposes a quota of 12 units. Find the new price after the quota is imposed. Compare the new price (with the quota) to the free trade price. By how much does the price rise after trade is restricted by the quota? What are the domestic production, the domestic consumption and amount imported with the quota?

D) Draw a Supply & Demand curve which shows all the information from Parts A-C: autarky, free trade and impact of the quota on production, consumption, imports & price.

E) After the quota in Part C is imposed, how has domestic welfare been affected? (Assume all quota rents go to domestic producers and calculate a value for the consumer deadweight loss, producer deadweight loss and total deadweight loss between the free trade outcome and the quota outcome.)

F) Suppose instead of the quota described in Part E that this country negotiates a voluntary export restraint of 12 units with its chief foreign supplier. Calculate a value for the quota rent, deadweight loss and the change in TOTAL welfare between the free trade outcome and the VER outcome.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M92636715

Have any Question?


Related Questions in Business Economics

Why does a government undertakes expansionary fiscal

Why does a government undertakes expansionary fiscal policy? What are the problems of undertaking expansionary fiscal policy? When is fiscal policy more appropriate than monetary policy?

A governments department of transportation reported that in

A? government's department of transportation reported that in? 2009, airline A led all domestic airlines in? on-time arrivals for domestic? flights, with a rate of 83?%. Complete parts a through e below. a. What is the p ...

A highway rest area contains a vending machine that

A highway rest area contains a vending machine that dispenses cups of coffee. The amount of coffee that the machine provides when a purchase is made approximately follows a uniform distribution between 200 and 250 ml. (a ...

Define economies of scope is this concept related to

Define economies of scope. Is this concept related to economies of scale? Explain. Define economies of scale. How does this relate to returns to scale?

Describe tim hortons experiences with mergersacquisitions

Describe Tim Hortons experiences with mergers/acquisitions. Did these combinations create or destroy value? Why?

A suppose that for a given year national saving in a

a. Suppose that, for a given year, national saving in a country (an open economy) equals 100, private consumption equals 50, and government consumption equals 20. What is the level of output in this country in this year? ...

Forty-nine percent of us teens have heard of a fax machine

Forty-nine percent of US teens have heard of a fax machine. You randomly select 12 US teens. Find the probability that the number of these selected teens that have heard of a fax machine is exactly six (first answer list ...

1 explain the different elements of property rights provide

1. Explain the different elements of property rights. Provide an example of how the US economy infringes on each. 2. Explain why inequality is considered to be a social "bad" by many people. In what way could inequality ...

Why the use of nash equilibrium is a solution concept in

Why the use of Nash equilibrium is a solution concept in games? Please give me an detailed explain.

When a country is closed qconsumed qproduced when a country

When a country is closed, Qconsumed= Qproduced. When a country opens to trade, this condition is not necessarily true; what condition must hold?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved