ECON 3HH3 Study Guide - Quiz Guide: Import Quota, Economic Surplus, Economic Equilibrium

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amaranthsnake273

19 Apr 2019

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Econ 3hh3 fall 2013: (8 points) consider the home country with the demand curve for coffee-makers given by. Home assignment #6: answer key and the supply curve given by. P=10+q. (a) calculate the equilibrium price and quantity of coffee-makers. (b) draw consumer surplus and calculate its exact value. (c) draw producer surplus and calculate its exact value. Now assume that home opens up to trade. Suppose it is a small economy so it faces the fixed world price of coffee-makers equal . (d) draw the new consumer surplus. Calculate its exact value. (e) draw the new producer surplus. What is the price of coffee in the home market? (i) calculate welfare losses from the import quota compared to the free trade case with the world price of coffee of . So the import quota of 15 pounds means p= (from 15 = 60- 1. 5p). (i) see figure 8. 9, where the losses from quota are an area (b+d)

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Trade Policy.

The demand for cars in Home is q = 30 â P and the supply of cars in Home is q = P. The demand for cars in Foreign is q = 10 â P and the supply of cars in Foreign is q = P.

a) Calculate the autarky equilibrium price and quantity in each country.

b) Who is the importer of cars and who is the exporter?

c) Write the import demand for Home and the export supply for Foreign.

d) Find the equilibrium world price under free trade. What is the amount of cars traded between the two countries?

e) Suppose the country that is the importer imposes a tariff of $2 per unit on car imports. Find the new equilibrium world price under the tariff. What is the amount of cars traded between the two countries now? Show this in a graph with the import demand for Home and the export supply for Foreign.

f) Look at figure 1 for Home and fill in the table below (with letters, no numbers) with the consumer surplus, producer surplus, government revenue and total surplus before and after the tariff.

g) Look at figure 2 for Foreign and fill in the table below ((with letters, no numbers) with the consumer surplus, producer surplus, government revenue and total surplus before and after the tariff.

h) Does Home experience a terms of trade gain or loss as a result of the tariff? Does Foreign experience a terms of trade gain or loss as a result of the tariff?

carminerat489

A natural monopolist faces the following demand curve: P = 334 - 4Q, its total cost is given by TC = 1500 + 14Q (marginal cost is the slope of total cost).

(a) If the government regulates the monopolist to charge a socially optimal price, what price will it charge and how many units will it sell? How much are the profit, consumer surplus, and producer surplus?

(b) If it is not a regulated monopolist, what is its profit-maximizing price and quantity (assuming single price monopolist)? How much are the profit, consumer surplus, producer surplus, and deadweight loss?

(c) If the regulated monopolist is allowed to charge a fair return price (which is $34), how much are the consumer surplus, producer surplus, and deadweight loss?

bronzefox742

A monopolist faces the following demand curve: P = 140 - 0.3Q, its total cost is given by: TC = 300 + 0.2Q^2 and its marginal cost is given by: MC = 0.4Q.

(a) If it is a single-price monopolist, what is its profit-maximizing price and quantity? Show your work. How much is the profit? How much are consumer surplus and producer surplus?

(b) Suppose it is a first-degree price discriminator instead of a single price monopolist. What is the lowest price that the monopolist will charge? How much will be the profit (loss) of the firm? Show your work. How much are consumer surplus and producer surplus?

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ECON 3HH3 Study Guide - Quiz Guide: Import Quota, Economic Surplus, Economic Equilibrium

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