Principles of Microeconomics Assignment

Answers to the following questions and problems solutions that are found in the book.

1)Problems based on Trade Practice Problem 9 You are given the following information: Domestic Supply: P = 2Q_sDomestic Demand: P = 50 - 2Q_D

a)Calculate consumer surplus and producer surplus for this market assuming the country is closed to trade and in equilibrium.

b)The country decides to allow free trade and the world price is $20. Will the country export or import?Moreover, calculate domestic supply, domestic demand, and the number of imports or exports in this market.

c)Find the consumer surplus, producer surplus, and gains to trade with free trade and the world price of $20.

d)Calculate market price, domestic quantity demanded, domestic quantity supplied, and identify whether the country imports or exports (and how much) if the government imposes a $3 tariff to the existing world price of $20.

e)Calculate the tariff revenue and deadweight loss associated with the country's decision to restrict trade with this $3 tariff.

2)List five arguments often given to support trade restrictions. How do economists respond to these arguments?

3)When China's clothing industry expands, the increase in world supply lowers the world price of clothing.

a) Draw an appropriate diagram to analyze how this change in price affects consumer surplus, producer surplus, and total surplus in a nation that imports clothing, such as the United States.

b) Now draw an appropriate diagram to show how this change in price affects consumer surplus, producer surplus, and total surplus in a nation that exports clothing, such as the Dominican Republic.

c) Compare your answers toparts (a)and(b). What are the similarities and what are the differences? Which country should be concerned about the expansion of the Chinese textile industry? Which country should be applauding it? Explain.

4)Read this article from BBC regarding one of the many tumultuous topics between Great Britain and the European Union.https://www.bbc.com/news/45877605Use your understanding of the impacts of trade to describe the impacts of an "export ban" on the domestic as well as foreign market. With the use of a graph or in words, describe everyone that is affected and identify if they are affected in a positive or a negative manner by the lack of trade.