Consider;
1)Before a tariff is imposed, what is the U.S. equilibrium price? Quantity of domestic consumption? Quantity of domestic production? And quantity of imports?
(QS = Domestic Production)
-10,000 + (1,000 x 24) = 14,000
QS=14,000
(QD = Consumption)
100,000 - (2,000 x 24) = 52,000
QD = 52,000
QD-QS=52,000-14,000=38,000
Quantity of Imports = 38,000
b)Congress has decided to help the baseball manufacturing industry by imposing a tariff of $6 per dozen. What is the new equilibrium price? Quantity of domestic consumption quantity? Quantity of domestic production? And quantity of imports?
$24 + $6=$30
Equilibrium Price = $30
QD = 100,000 - (2,000 x 30)
= 100,000 - 60,000
= 40,000
QS = 10,000 + (1,000 x 30)
= 10.000 + 30,000
= 20,000
QD - QS = 40,000 - 20,000
Import = 20,000
c)What are the losses to U.S. consumers, gains to U.S. producers, revenue gained by the government, and deadweight loss from the tariff? (Answer in $.)
Consumer Surplus = (CS)
QD = 0
P = 100,000/2,000 = $50
Before Tariff
CS = 0.5 x ($50-$24) x 52,000
26,000 x $26 = 13
13 x 52,000 = $676,000
After Tariff
CS = 0.5 x ($50 -30) x 40,000 = 20,000
20,000 x $20 = $400,000
$676,000 - $400,000 =$276,000
Loss in US Consumers =$276,000
Producer Surplus = (PS)
QS = 0
P = 10,000/1,000 = $10
Before Tariff
PS = 0.5 x ($24 - $10) = 7,000
7,000 x $14 = $98,000
After Tariff
PS = 0.5 x ($30 - $10) = 10,000
10,000 x $20 = $200,000
$200,00 - $98,000 = $102,000
Gains in US Producers = $102,000
Revenue gained by government = $6 x $200,000 = $120,000
Deadweight Loss = $276,000 - $120,000 - 102,000 = $54,000
0.5 (43-60) x ($16,000 - $14,000) = -$17,000
Deadweight Loss from Tariff =- $17,000
d)What quota level would have the equivalent effect on price as the $6 tariff?
An amount of 20,000 units from imports would have a equivalent effect.
e ) What is the deadweight loss from the quota? (Answer in $.)
Equilibrium Price = $24 (With no Tariff)
(Consumption) = QD = $100,000 - $2,000 ($24) = $52,000
(Domestic Supply) = QS = $100,000 + 1,000 ($24) = $14,000
Imports = $52,000 - $14,000 = $38,000
New Equilibrium Price = $24 + $6 = $30
(Consumption) = QD = $100,000 - $2,000 ($30) = $40,000
(Domestic Supply) = QS = $100,000 + 1,000 ($30) = $20,000
Imports = $40,000 - $20,000 = $20,000
AP Macroeconomics Unit 6: Inflation, Unemployment and Stabilization Policies ASSUITIt all COUTUIlly UIat IS UpCIquily auUVE lull CITYIVYIIIGIRL. A. Draw a correctly labeled aggregate demand and aggregate supply graph and show each of the following: 1. The long-run aggregate supply curve ii. Current price level and output levels, labeled PLe and Ye ili. Full employment output, labeled Yf B. Identify one fiscal policy action that could resolve the problem. C. Using your graph in Part A, show the short-run effects of the action you identified on each of the following: i. Aggregate demand. Explain (use the cause and effect chain you learned in the lesson) ii. Output iii. Price level D. Using a correctly labeled loanable funds graph, show the effect of the policy you identified in Part B on real interest rates. E. Given the change in the real interest rate in Part D, what is the impact on each of the following? i. Investment ii. Economic growth rate. Explain. iii. The international value of the dollar. Explain. F. Now assume instead that the government takes no policy action to fix the problem identified in part A. i. In the long run, will the short-run aggregate supply increase, decrease, or remain unchanged? Explain. 3 of 47-HEconomic models do all of the following except A) answer economic questions B) portray reality in all its minute details. " make economic ideas explicit and concrete for use by decision makers. D) simplify some aspect of economic life. .7 Which of the following is a macroeconomic question? A) What determines the growth rate of gross domestic product? B) How is the production quantity of snowboards determined? C) What factors determine the price of electronic cigarettes? D) What determines the salaries of Wall Street executives?1. Consider the following statements: A) car owners purchase more gasoline from a gas station that sells gasoline at a lower pr that other rival gas stations in the area B) banks do not take steps to increase security since they believe it is less costly to allow some bank robberies that to install expensive security monitoring equipment C) firms produce more of a particular DVD when its selling price rises Which of the above statements demonstrates that economic agents respond to incentives A. A only B. B only C. Conly D. A and B only E. A, B, and C 2. Society faces a tradeoff in all of the following situations except A. when deciding who will receive the goods and services produced B. when deciding what goods and services will be produced C. when deciding how goods and services will be produced D. when some previously unemployed workers find jobs 3. Which of the following is a positive economic statement? A. people should not buy SUVs B. the government should mandate electric automobiles C. scarcity necessitates that people make trade-offs D. foreign workers should not be allowed to work for lower wages that the citizens country 4. Which of the following is a macroeconomics question? A. what determines the inflation rate B. what determines the production of DVDs C. what factors determine the price of carrots D. what determines the wage of auto workersAnswer the following questions based on the assumption that you are dealing with an international bank and these are the prices they have quoted you (show your calculation where appropriate) 1. You want to purchase EUR for delivery in six months. The rate you will pay is (2 points) 2 You want to purchase JPY for delivery in three months. You rate you will pay IS (2 points) 3. You want to sell CAD for delivery in one month. The rate you will sell for is (2 points) 4. You want to sell EUR for spot delivery. The rate you will sell at is (1 point) 6, You wish to purchase EUR using a futures contract for December 2014 delivery. The rate for the contract is (1 point) 6. You wish to sell EUR using a futures contract for June 2015. The rate for the contract is (1 point) 7 Based on the value of the March 2015 futures contract, does the market expect the USD to appreciate or depreciate against the Euro in the spot market? (2 points) 8. Based on the value of the September 2014 futures contract, does the market opect the USD to appreciate or depreciate against the EUR in the spot market? OHO QUESTION 3 Jason has $100,000 to invest in a savings account. He has two options: Option A earns 4% interest compounded quarterly, and Option B earns 3.994 interest compounded continuously. Which account will be more valuable after 10 years? O Option A O Option B QUESTION 4 These two questions Jason has $100,000 to invest in a savings account. He has two options: Option A earns 49% interest compounded quarterly Option B earns 3.99% Interest compounded continuously. How much more money will be in the more valuable account after 10 years? Send a chat Click Save and Submit to save and submit. Click Save All Answers to save all answers. Saye All O
