D21 Course Schedule - 22F --Busir X D21 MindTap Assignment 10: Chapt X MindTap - Cengage Learning X + C eng.cengage.com/staticb/ui/evo/index.html?deploymentld=59452325451249338856245831&elSBN=9780176887797&id=1607661390&sn CENGAGE | MINDTAP MindTap Assignment 10: Chapters 14 & 15 In the following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action," and enter each country's final consumption of each good on the line marked "Consumption." When the two countries did not specialize, the total production of rye was 36 million bushels per week, and the total production of jeans was 104 million pairs per week. Because of specialization, the total production of rye has increased by 0 million bushels per week, and the total production of jeans has increased by 8 million pairs per week. Because the two countries produce more rye and more jeans under specialization, each country is able to gain from trade. Calculate the gains from trade-that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption") Dolorium Arcadia Rye Jeans Rye Jeans (Millions of bushels) (Millions of pairs) (Millions of bushels) ( Millions of pairs) Without Trade Production 24 12 72 Consumption 24 32 12 With Trade Production Trade Action Consumption Gains from Trade Increase in Consumption Grade It Now Save & Continue MacBook Air esc 20 388 F4 F6 a 5 2 Q W E R T Y U A S D F G H J K Z X C V B M21 Course Schedule - 22F --Busin X D21 MindTap Assignment 10: Chapt X MindTap - Cengage Learning x + C eng.cengage.com/staticb/ui/evo/index.html?deploymentld=59452325451249338856245831&elSBN=9780176887797&id=1607661 CENGAGE | MINDTAP MindTap Assignment 10: Chapters 14 & 15 With free trade, the price of cheese in Algeria would be $ per tonne. Algeria would produce million tonnes of cheese and import million tonnes. Suppose Algeria's government imposes a 60% tariff on cheese imports. Assume the tariff does not influence the world price of cheese. On the preceding graph, use the black line (plus symbol) to show the world supply of cheese with the tariff. The tariff Algeria's production of cheese by million tonnes, its domestic consumption by million tonnes, and its imports by million tonnes. O On the preceding graph, use the green quadrilateral (triangle symbols) to shade the area that represents tariff revenue. Then use the purple point (diamond symbol) to shade the area that represents the change in the producer surplus resulting from the tariff. Finally, use the black points to shade the area, or areas if there are more than one on the graph, that together represent the deadweight loss resulting from the tariff. Note: Select and drag a fill area point from the palette to the graph. To fill in regions on the graph, merely drop the fill area point on the desired region. Fill in the blank cells in the following table to summarize the effects of the tariff on Algeria's welfare. (Hint: The area of each shaded region on the graph can be found by clicking on the polygon.) Amount of Change Change In... Gain or Loss ( Millions of dollars) Tariff revenue Producer surplus Consumer surplus Change in total welfare MacBook Air esc 30 F6 W# 6 2 Q W E R T Y U A S D F G H121 Course Schedule - 22F --Busir X D21 MindTap Assignment 10: Chapt X MindTap - Cengage Learning X + C ng.cengage.com/staticb/ui/evo/index.html?deploymentld=59452325451249338856245831&elSBN=9780176887797&id=1607661390&s CENGAGE | MINDTAP MindTap Assignment 10: Chapters 14 & 15 2. Gains from trade Consider two neighbouring island countries called Dolorium and Arcadia. They each have-4 million labour hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using one hour of labour. Rye Jeans Country (Bushels per hour of labour) (Pairs per hour of labour) Dolorium 32 Arcadia 12 24 Initially, suppose Arcadia uses 1 million hours of labour per week to produce rye and 3 million hours per week to produce jeans, while Dolorium uses 3 million hours of labour per week to produce rye and 1 million hours per week to produce jeans. Consequently, Dolorium produces 24 million bushels of rye and 32 million pairs of jeans, and Arcadia produces 12 million bushels of rye and 72 million pairs of jeans. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of rye and jeans it produces. Dolorium's opportunity cost of producing 1 bushel of rye is _4 pairs of jeans, and Arcadia's opportunity cost of producing 1 bushel of rye is 2 pairs of jeans. Therefore, Dolorium has a comparative advantage in producing rye, and Arcadia has a comparative advantage in producing jeans. Suppose that each country completely specializes in producing the good in which it has a comparative advantage, producing only that good. In this case, the country that produces rye will produce 36 million bushels per week, and the country that produces jeans will produce 96 million pairs per week. In the following table, enter each country's production decision in the third row of the table (marked "Production"). Suppose the country that produces rye trades 26 million bushels of rye to the other country in exchange for 78 million pairs of jeans. In the following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action," and MacBook Air esc 20 888 F4 F6 SD 2 5 6 O Q W E R T Y U O A S D F G H K Z X C B N MDzi Course Schedule - 22F --Busin X D21 MindTap Assignment 10: Chapt X MindTap - Cengage Learning X + C eng.cengage.com/staticb/ui/evo/index.html?deploymentid=59452325451249338856245831&elSBN=9780176887797&id=1607661390&snapshot! CENGAGE MINDTAP a MindTap Assignment 10: Chapters 14 & 15 3. Effects of a tariff Suppose the following graph shows the domestic demand (D) and domestic supply (S) for cheese in Algeria, which is a producer as well as an importer of cheese. The free trade world price of cheese (Pw) is $1,000 per tonne. (? 2800 +- 2600 2400 Price with Tariff O 2000 1800 Tariff Revenue 1600 PRICE/COST (Dollars per tonne 1400 Change in PS 1200 1000 800 DWI 600 400 7 10 12 QUANTITY (Millions of tonnes) With free trade, the price of cheese in Algeria would be $ per tonne. Algeria would produce million tonnes of cheese and import million tonnes. Suppose Algeria's government imposes a 60% tariff on cheese imports. Assume the tariff does not influence the world price of cheese. MacBook Air esc 30 W # 5 6 Q W E R U O A S D F G H K Z X C V B N M