TAMU ECON 452 - Exercise 8 (12 pages)

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Exercise 8



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Exercise 8

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Pages:
12
School:
Texas A&M University
Course:
Econ 452 - Internat Trade Policy
Unformatted text preview:

EXERCISE 8 1 U S IMPORT DEMAND In the United States demand for corn syrup is P 38 Q and supply is P 26 Q 1 Determine the price of corn syrup in U S autarky 2 Construct U S import demand EXERCISE 8 2 MEXICAN EXPORT SUPPLY In Mexico demand is P 34 Q and supply is P 22 Q 1 Determine the price of corn syrup in Mexican autarky 2 Construct Mexican export supply EXERCISE 8 3 WORLD EQUILIBRIUM 1 Determine the world price under free trade 2 Determine U S imports under free trade 3 Determine Mexican exports under free trade 4 Determine the U S quantity demanded and quantity supplied of corn syrup under free trade EXERCISE 8 4 U S IMPORT TARIFF Suppose the United States now places a specific tariff T 2 on imports of corn syrup from Mexico 1 Construct the tariff ridden U S import demand 2 Find the tariff ridden Mexican price 3 Find the tariff ridden U S price 4 Find the tariff ridden volume of trade 5 Determine the tariff ridden U S quantity demanded and quantity supplied of corn syrup EXERCISE 8 5 U S WELFARE 1 Determine the change in U S producer surplus due to the tariff 2 Determine the change in U S consumer surplus due to the tariff 3 Determine the change in U S government revenue due to the tariff 4 Determine the change in total U S welfare due to the tariff 5 Determine the production distortion consumption distortion efficiency loss and TOT effect for the United States EXERCISE 8 1 SOLUTIONS U S IMPORT DEMAND In the United States demand for corn syrup is supply is 1 and Determine the price of corn syrup in U S autarky The U S autarkic price of corn syrup equates U S demand and U S supply 2 Construct U S import demand U S import demand is the amount that quantity demand exceeds quantity supplied of corn syrup for various prices EXERCISE 8 2 SOLUTIONS MEXICAN EXPORT SUPPLY In Mexico demand is 1 and supply is Determine the price of corn syrup in Mexican autarky Mexican autarkic price equates Mexican demand and Mexican supply 2 Construct Mexican export supply Mexican export supply is the amount that supply exceeds demand of corn syrup for various prices EXERCISE 8 3 SOLUTIONS WORLD EQUILIBRIUM 1 Determine the world price under free trade The world price equates U S import demand and Mexican export supply 2 Determine U S imports under free trade U S imports under free trade are 3 Determine Mexican exports under free trade Mexican exports under free trade are also 4 Determine the U S quantity demanded and quantity supplied of corn syrup under free trade EXERCISE 8 4 SOLUTIONS U S IMPORT TARIFF Suppose the United States now places a specific tariff imports of corn syrup from Mexico 1 Construct the tariff ridden U S import demand 2 Find the tariff ridden Mexican price 3 Find the tariff ridden U S price 4 Find the tariff ridden volume of trade 5 Determine the tariff ridden U S quantity demanded and quantity supplied of corn syrup on EXERCISE 8 5 SOLUTIONS U S WELFARE 1 Determine the change in U S producer surplus due to the tariff 2 Determine the change in U S consumer surplus due to the tariff 3 Determine the change in U S government revenue due to the tariff 4 Determine the change in total U S welfare due to the tariff 5 Determine the production distortion consumption distortion efficiency loss and TOT effect for the United States Exercise 8 3 World Corn Syrup Market 33 X 32 31 30 29 28 M 27 0 4 Quantity Traded 8 4 World Market with U S Tariff 33 X 32 31 30 29 M 28 M 27 0 2 4 Quantity Traded 6 8 8 5 U S Market with U S Tariff 33 D 32 31 a S b 30 c d e 29 28 27 0 1 2 3 4 5 6 7 8 U S Quantity 9 10 11 12


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