Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consider the market for blueberries (a homogeneous product) in Madagascar, which is con sidered a small country. Demand for a good is given by Q9
Consider the market for blueberries (a homogeneous product) in Madagascar, which is con sidered a small country. Demand for a good is given by Q9 = 100 P. Domestic supply for the good is given by: Q3 = P. Each country that exports blueberries has dierent marginal cost: $30 per crate in South Africa, $25 per crate in Peru, and $20 per crate in Chile.1 (a) Calculate the price, domestic output, consumption, imports, consumer surplus, and producer surplus associated with blueberries in the Madagascar freetrade equilibrium. (b) In the freetrade equilibrium, how many crates of blueberries are imported from each of the three source countries? (c) Calculate the price, domestic output, consumption, imports, consumer surplus, pro ducer surplus, and government revenue associated with blueberries if Madagascar adOpts a $15 MFN tariff on all WTO members. How many crates of blueberries are imported from each of the three source countries? (d) With the adOption of a Southern African Free Trade Agreement (SAFTA), farmers in South Africa can export to Madagascar tarifffree. Calculate the price, domestic out put, consumption, imports, consumer surplus, and producer surplus in the Madagascar blueberry market. How many crates of blueberries are imported from each of the three source countries? (e) Compared to your answer from part (0), did SAFTA increase or decrease welfare in Madagascar? By how much? What can you conclude about the relative effects of trade creation and trade diversion as a result of the agreement
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started