Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. Variable levies The following graph shows the market for wheat in the European Union (EU). The world price of wheat is $2.00 per bushel,

3. Variable levies

The following graph shows the market for wheat in the European Union (EU). The world price of wheat is $2.00 per bushel, so SWorldWorldrepresents the world supply assuming that the EU cannot affect the world price of wheat. To support the agricultural sector, the EU guarantees a certain price for the farmers by imposing a variable levy of $2.00 per bushel to limit the import of wheat.

On the graph, use the purple line (diamond symbol) to show the support price the farmers receive due to the variable $2.00 levy.

Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position.

Support PriceSWorld,New0200040006000800010000120001400016000180002000010.009.008.007.006.005.004.003.002.001.000PRICE (Dollars per bushel)WHEAT (Bushels)DEUSEUSWorldY-Intercept: 3Slope: 012000, 4

Fill in the following table by entering the quantities for production, consumption, and imports of wheat in the EU before and after the $2.00 levy.

ProductionConsumptionImports
(Bushels)(Bushels)(Bushels)
Before the levy
After the levy

Suppose that the world price of wheat rises to $3.00 per bushel, but the EU keeps the same support price for the farmers.

On the previous graph, use the grey line (star symbol) to draw the new world supply curve (SWorld,NewWorld,New).

Given the change in the world price, the variable levy adjusts to $-----------------per bushel of wheat in order to maintain the support price.

Which of the following describe the effects of the variable levy on international trade?Check all that apply.

Foreign producers are discouraged from reducing prices to maintain export sales.

Foreign producers have no incentive to subsidize their exports.

Foreign producers are more aggressive in subsidizing their exports to capture a larger share of the world market.

image text in transcribedimage text in transcribed
3. Variable levies The following graph shows the market for wheat in the European Union (EU). The world price of wheat is $2.00 per bushel, so SWorld represents the world supply assuming that the EU cannot affect the world price of wheat. To support the agricultural sector, the EU guarantees a certain price for the farmers by imposing a variable levy of $2.00 per bushel to limit the import of wheat. On the graph, use the purple line (diamond symbol) to show the support price the farmers receive due to the variable $2.00 levy. Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position. DEU SEU 10.00 8.00 Support Price 8.00 7.00 6.00 SWorld New 2 5.00 PRICE (Dollars per bushel) 2 4.00 3.00 SWorld 2.00 1.00 0 2000 4000 6000 8000 10000 12000 14000 18000 18000 20000 WHEAT (Bushels) Fill in the following table by entering the quantities for production, consumption, and imports of wheat in the EU before and after the $2.00 levy. Production Consumption ImportsHomework 5 (Ch 08) 6.00 SWorld. New 5.00 PRICE (Dollars per bus 4.00 3.00 2.00 SWorld 100 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 WHEAT (Bushels) Fill in the following table by entering the quantities for production, consumption, and imports of wheat in the EU before and after the $2.00 levy. Production Consumption Imports (Bushels) ( Bushels) (Bushels) Before the levy After the levy Suppose that the world price of wheat rises to $3.00 per bushel, but the EU keeps the same support price for the farmers. On the previous graph, use the grey line (star symbol) to draw the new world supply curve (Sworld, New). Given the change in the world price, the variable levy adjusts to $ per bushel of wheat in order to maintain the support price. Which of the following describe the effects of the variable levy on international trade? Check all that apply. Foreign producers are discouraged from reducing prices to maintain export sales. Foreign producers have no incentive to subsidize their exports. Foreign producers are more aggressive in subsidizing their exports to capture a larger share of the world market

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Theory And Practice Of Public Sector Reform

Authors: Steven Van De Walle, Sandra Groeneveld

1st Edition

1317500113, 9781317500117

More Books

Students also viewed these Economics questions

Question

What are the assumptions of the test based on the ????-ratio?

Answered: 1 week ago

Question

1. To gain knowledge about the way information is stored in memory.

Answered: 1 week ago