Consider a hypothetical example of trade in aluminum between the United States and China. For simplicity, assume that China is the only source of U.S. aluminum imports. The following graph shows the U.S. market for aluminum. Note that in the absence of any trade, the market price for aluminum in the United States is $500 per tonne, and the equilibrium quantity is 100 million tonnes per month. Use the green area ( triangle symbol) to Show U.S. consumer surplus under free trade with China, and use the purple area (diamond symbol) to show US. producer surplus under free trade with China, (9 1030 Domestic Demand Domestic Suppl A 900 Consumer Surplus Producer Surplus 800 600 500 400 Free Trade Pn'ce 3m ----- PRICE (Dollars per tonne) 200 100 020405030100120140150130200 QUANTITY OF ALUMINUM (Millions oftonnes per month} Use the previous graph to complete the first row of the following table by indicating the quantity of aluminum supplied by U. S. producers, demanded by U.S. consumers, and imported from China under free trade, Use the previous graph to complete the first row of the following table by indicating the quantity of aluminum supplied by U.S. producers, demanded by U.S. consumers, and imported from China under free trade. Quantity Demanded by U.S. Quantity Supplied by U.S. Producers Consumers Quantity Imported from China ( Millions of tonnes of aluminum per (Millions of tonnes of aluminum per ( Millions of tonnes of aluminum per month) month) month) Free Trade Trade with Tariff Suppose American aluminum manufacturers convince the U.S. government that Chinese firms are selling aluminum in the U.S. market at well below the cost of producing the aluminum, a practice known as dumping. In response to the accusations, the U.S. government puts a tariff of $100 per tonne on aluminum from China. The tariff increases the price of aluminum from $300 to $ per tonne. Complete the second row of the previous table by indicating the quantity of aluminum supplied by U.S. producers, demanded by U.S. consumers, and imported from China in the presence of a $100-per-tonne tariff. On the following graph, use the black line (cross symbol) to indicate the domestic price of aluminum in the presence of a $100-per-tonne tariff. Then use the green area (triangle symbol) to shade the area that represents consumer surplus under the tariff, and use the purple area (diamond symbol) to shade the area that represents producer surplus under the tariff. Finally, use the grey rectangle (star symbols) to show the revenue that the U.S. government collects as a result of the tariff, and use the tan triangles (dash symbols) to show the deadweight loss (DWL) from the imposition of the tariff. Note: There are two DWL triangles. Plot the right-most DWL triangle first, then plot the left-most DWL triangle after that. Plotting the DWL triangles out of order may cause your answer to be graded incorrectly. (? )use the green area ( triangle symbol) to shave the area that represents consumer surplus under the car, and use the purple ared (Ulamonu symbol) to shade the area that represents producer surplus under the tariff. Finally, use the grey rectangle (star symbols) to show the revenue that the U.S. government collects as a result of the tariff, and use the tan triangles (dash symbols) to show the deadweight loss (DWL) from the imposition of the tariff Note: There are two DWL triangles. Plot the right-most DWL triangle first, then plot the left-most DWL triangle after that. Plotting the DWL triangles out of order may cause your answer to be graded incorrectly. 1000 `Domestic Demand Domestic Supply 900 Price with Tariff 800 A 700 800 Consumer Surplus 500 PRICE (Dollars per tonne) 400 Producer Surplus Free Trade Price 300 200 Tariff Revenue 100 0 0 20 40 0 100 120 140 160 180 200 DWL QUANTITY OF ALUMINUM (Millions of tonnes per month) True or False: According to this model, restricting trade using tariffs harms both consumers and domestic producers. O True O False1. Definition of economic costs Jacques lives in Miami and runs a business that sells pianos. In an average year, he receives $723,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $423,000; he also pays wages and utility bills totaling $267,000. He owns his showroom; if he chooses to rent it out, he will receive $2,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Jacques does not operate this piano business, he can work as a financial advisor, receive an annual salary of $20,000 with no additional monetary costs, and rent out his showroom at the $2,000 per year rate. No other costs are incurred in running this piano business. Identify each of Jacques's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wholesale cost for the pianos that Jacques pays the manufacturer O O The salary Jacques could earn if he worked as a financial advisor O O The wages and utility bills that Jacques pays O O The rental income Jacques could receive if he chose to rent out his showroom O O Complete the following table by determining Jacques's accounting and economic profit of his piano business. Profit (Dollars) Accounting Profit Economic Profit