6.Import taxes: how does the small country case compare with the large country case, in which case the large country is able to affect world prices?

Select one:

a. In the large country case, the importing country is able to lower world prices, and its govt is pocketing part of that decrease. There is still a DWL, so collectively, everyone is worse off, but because the govt is capturing part of what had been the gain of other countries (by lowering Pw), so long as that gain is greater than the DWL the country is better off.

b. In the large country case, the importing country is unable to affect world prices, and its govt revenues are neutral. There is still a DWL, so collectively, everyone is worse off, but because the govt is capturing part of what had been the gain of other countries (by lowering Pw), so long as that gain is greater than the DWL the country is better off

c. In the large country case, the importing country is able to increase world prices, and its govt is pocketing part of that increase. There is still a DWL, so collectively, everyone is worse off, but because the govt is capturing part of what had been the gain of other countries (by lowering Pw), so long as that gain is greater than the DWL the country is better off.

d. In the large country case, the exporting country is able to lower world prices, and its govt is pocketing part of that decrease. There is still a DWL, so collectively, everyone is worse off, but because the govt is capturing part of what had been the gain of other countries (by lowering Pw), so long as that gain is greater than the DWL the country is better off.

7.

Over the past decades, what has happened to farms in Canada?

Select one:

a. Farm size has gone up, and the number of farmers has gone down. The average farmer is younger now than in the past.

b. Farm size has gone up, and the number of farmers has gone down. The average farmer is older now than in the past.

c. Farm size has gone down, and the number of farmers has gone down. The average farmer is older now than in the past.

d. Farm size has gone up, and the number of farmers has also gone up. The average farmer is older now than in the past.

e. Farm size has gone down, and the number of farmers has gone up as land became cheaper. The average farmer is older now than in the past.

f. Farm size has gone up, and the number of farmers has also gone up. The average farmer is younger now than in the past.

8.

Julie owns a tobacco farm, and Derek owns a tobacco company. They decide to enter into a farm contract. Julie agrees that all of her tobacco leafs must comply with Dereks quality standards, so that he can produce cigarettes using her leafs. If she fails to meet the quality standards we have agreed upon, I will have to pay a monetary penalty.

In June of 2017, they use the equilibrium price and quantity at that moment to form the basis of their contract. They agreed on a price of $5,000 per metric ton and a quantity of 100 metric tons to be sold in August of 2017.

What is the change in consumer surplus that Derek is unable to capture (he is bound by the price of $5,000 and quantity of 100 metric tons) if the market price of tobacco falls to a new equilibrium price of $3,000/metric ton and equilibrium quantity of 150 metric tons? Was this a good deal for Derek?

Select one:

a. By entering the futures contract, Derek lost 50,000 in consumer surplus that he would have been able to capture under the new price and quantity.

b. By entering the futures contract, Derek lost 75,000 in consumer surplus that he would have been able to capture under the new price and quantity.

c. By entering the futures contract, Derek gained 25,000 in consumer surplus that he would not have been able to capture under the new price and quantity.

d. By entering the futures contract, Derek lost 40,000 in consumer surplus that he would have been able to capture under the new price and quantity.

e. By entering the futures contract, Derek gained 50,000 in consumer surplus that he would not have been able to capture under the new price and quantity.

9.

What is decoupling? Is it required by the WTO?

Select one:

a. Decoupling is part of Growing Forward 2, an agricultural program created by the Canadian government. It is required by the WTO.

b. Decoupling means that a program is set up so that farmers receive money regardless of what or how much they produce, so that government subsidies dont actually influence farmers production decisions. It is required by the WTO.

c. Decoupling is part of Growing Forward 2, an agricultural program created by the Canadian government. It is not required by the WTO.

d. Decoupling means that farmers receive subsidies even in good harvest years. It is required by the WTO.

e. It means that agricultural programs are not influenced by politics - hence, they are decoupled. It is not required by the WTO.

10.

Lets say a Canadian beef producer signs a contract to sell beef in the US in US dollars. The Canadian dollar increased in value from US$ 0.95 per C$ to US$ 1.05 per C$. Assume the price of beef on the US contract is US$20/pound. Answer:

1. How much does the Canadian farmer receive per pound at the $0.95 exchange rate?
2. How much at the $1.05 exchange rate?
3. What is the effect of the increase in the value of the Canadian dollar w.r.t. farm income in Canada?

Select one:

a. $21.05, $19.05, a higher Canadian dollar increases farm income in Canadian dollars

b. $21.05, $19.05, a higher Canadian dollar decreases farm income in Canadian dollars

c. $21.25, $19.25, a higher Canadian dollar increases farm income in Canadian dollars

d. $22.05, $18.05, a higher Canadian dollar decreases farm income in Canadian dollars