TT Rotate Left Rotate Right Bookmark Typewriter Highlight Image Annotation Audio & Video Insert Comment Links Module 2 - X advanced_microecon... Carbaugh, Int'l Econo... economic analysis for ... Set06a-Tar.pdf A. The international green gage plum (Prunus domestica ssp. italica) industry has been in considerable turmoil over the last few years due to rapid rates of technical change. The changes relate largely to the breeding of more manageable varieties of green gage plum trees which have been easily adopted around the world. The major effect of this technological change has been a rapid decline in international prices. The international price (Pw) now faced by the country in this question, however, has now stabilized at 60 currency units. While new technology in the green gage plum industry has been adopted widely internationally, it has not been universally adopted by farmers in any country. In the country considered in this question, approximately 20 percent of the farmers have successfully adopted the new technology and can be considered efficient. The following is some production data pertaining to these efficient farms. (MC = marginal cost, AC average cost) ja TI Link Te 158.09% Rotate Left Rotate Right Reflow Typewriter Highlight File Attachment Bookmark Image Annotation Audio & Video Unks Insert Comment 855 - Module 2 - x advanced microecon... Carbaugh, Intl Econo... economic analysis for L.. Set06a-Tar.pdf While new technology in the green gage plum industry has been adopted widely internationally, it has not been universally adopted by farmers in any country. In the country considered in this question, approximately 20 percent of the farmers have successfully adopted the new technology and can be considered efficient. The following is some production data pertaining to these efficient farms. (MC = marginal cost, AC = average cost) Quantity 90,000 80,000 70,000 60,000 50,000 40,000 MC 250 160 110 80 60 55 AC 88 84 78 73 60 70 annatadant the new On the other hand, the other 80 percent of the farmers have not or cannot adopt the new technology. They remain high cost (inefficient) producers. Their production information is as follows Quantity 8.000 7.000 6.000 5.000 4,000 3.000 MC 250 160 110 80 60 55 AC 120 113 110 115 125 145 advanced microecon... Carbaugh, Int'l Econo... economic analysis for L.. Set06-Tar.pdf 7,000 6,000 5,000 4,000 3,000 160 110 80 60 55 113 110 115 125 145 (a) At the current international price (Pw), are efficient farms making a normal rate of return? Why or Why not? (b) Calculate the one period profits or losses of an individual inefficient green gage plum farm at the current Pw (show all calculations in this and each section below). Given the following information on the market for green gage plums in the country under discussion: Short run supply of green gage plums: Qasr = -140,000 + 4000P Demand for green gage plums: Qd = 816,000 - 3600P (Note the quantity units in the market are different than those used in the firm level data - i.e. they are a different scale). (c) Is the country a net importer or net exporter at the current Pw? How much (quantity)? (d) Would you expect inefficient green gage plum farmers to be lobbying the government for protection? Why? (e) If the government was considering implementing a tariff to increase the incomes of inefficient green gage plum farmers, how large a tariff would be required to prevent inefficient green gage plum farmers from leaving the industry. Why? (1) Calculate the short run change in producers surplus that would arise from the imposition of the tariff. (g) Calculate the short run change in consumers surplus that would arise from the imposition of the tariff. (h) Calculate the one period revenue the government would collect from imposing the tariff 41213 Rotate Right Audio & Video Insert Wew Comment Link advanced_microecon... Carbaugh, Int'l Econo... economic analysis for t... Set06-Tar.pdf AREC 855 - Module 2 - IT Calculate the SOIL TUI change m proucis surprus wat woulu TSC TUTTI imposition of the tariff. (g) Calculate the short run change in consumers surplus that would arise from the imposition of the tariff. (h) Calculate the one period revenue the government would collect from imposing the tariff. (i) Calculate the value of the short run dead weight loss arising from the imposition of the tariff. 6) Calculate the value of the short run change in total welfare as a result of the imposition of the tariff. (k) Calculate the one period profit or loss that efficient firms would experience as a result of the imposition of the tariff. (1) If the current and expected future interest rate is 6.2 percent and the tariff was expected to be in place in perpetuity, calculate the increase in the value of fixed assets that efficient farms can expect to realize as a result of the policy. (m)If additional land suitable for green gage plum production is readily available. what would you expect to happen in the green gage plum industry over the long run? Why? economic analysis for L.. Setoa Tar.pdf Carboh, Intl Econo... n) It the market moves to a long run equilibrium over time and the government adjusts its policy to reflect the change; i.e. keeping price high enough to prevent the exit of inefficient farms, what will be the quantity of green gage plums imported or exported? (0) Calculate one period government revenue or expenditure in long run equilibrium. (p) What is the effect on consumers surplus of moving from the short to the long run? Explain (q) At the WTO, there has been a proposal put forward by traditional green gage plum exporters to cut support to green gage plum farmers by an amount that would equal 30 currency units per unit of quantity. Calculate the effect of this change on the value of fixed assets of efficient farms. What would you expect an industry group representing efficient farms to advise the Ministers of Agriculture and Trade regarding the proposal? (1) What would be the effect on inefficient farms of the proposed change in trade policy outlines in section (q). Explain. 41213 economic analysis for L.. Setoa Tar.pdf Carboh, Intl Econo... n) It the market moves to a long run equilibrium over time and the government adjusts its policy to reflect the change; i.e. keeping price high enough to prevent the exit of inefficient farms, what will be the quantity of green gage plums imported or exported? (0) Calculate one period government revenue or expenditure in long run equilibrium. (p) What is the effect on consumers surplus of moving from the short to the long run? Explain (q) At the WTO, there has been a proposal put forward by traditional green gage plum exporters to cut support to green gage plum farmers by an amount that would equal 30 currency units per unit of quantity. Calculate the effect of this change on the value of fixed assets of efficient farms. What would you expect an industry group representing efficient farms to advise the Ministers of Agriculture and Trade regarding the proposal? (1) What would be the effect on inefficient farms of the proposed change in trade policy outlines in section (q). Explain. 41213 TT Rotate Left Rotate Right Bookmark Typewriter Highlight Image Annotation Audio & Video Insert Comment Links Module 2 - X advanced_microecon... Carbaugh, Int'l Econo... economic analysis for ... Set06a-Tar.pdf A. The international green gage plum (Prunus domestica ssp. italica) industry has been in considerable turmoil over the last few years due to rapid rates of technical change. The changes relate largely to the breeding of more manageable varieties of green gage plum trees which have been easily adopted around the world. The major effect of this technological change has been a rapid decline in international prices. The international price (Pw) now faced by the country in this question, however, has now stabilized at 60 currency units. While new technology in the green gage plum industry has been adopted widely internationally, it has not been universally adopted by farmers in any country. In the country considered in this question, approximately 20 percent of the farmers have successfully adopted the new technology and can be considered efficient. The following is some production data pertaining to these efficient farms. (MC = marginal cost, AC average cost) ja TI Link Te 158.09% Rotate Left Rotate Right Reflow Typewriter Highlight File Attachment Bookmark Image Annotation Audio & Video Unks Insert Comment 855 - Module 2 - x advanced microecon... Carbaugh, Intl Econo... economic analysis for L.. Set06a-Tar.pdf While new technology in the green gage plum industry has been adopted widely internationally, it has not been universally adopted by farmers in any country. In the country considered in this question, approximately 20 percent of the farmers have successfully adopted the new technology and can be considered efficient. The following is some production data pertaining to these efficient farms. (MC = marginal cost, AC = average cost) Quantity 90,000 80,000 70,000 60,000 50,000 40,000 MC 250 160 110 80 60 55 AC 88 84 78 73 60 70 annatadant the new On the other hand, the other 80 percent of the farmers have not or cannot adopt the new technology. They remain high cost (inefficient) producers. Their production information is as follows Quantity 8.000 7.000 6.000 5.000 4,000 3.000 MC 250 160 110 80 60 55 AC 120 113 110 115 125 145 advanced microecon... Carbaugh, Int'l Econo... economic analysis for L.. Set06-Tar.pdf 7,000 6,000 5,000 4,000 3,000 160 110 80 60 55 113 110 115 125 145 (a) At the current international price (Pw), are efficient farms making a normal rate of return? Why or Why not? (b) Calculate the one period profits or losses of an individual inefficient green gage plum farm at the current Pw (show all calculations in this and each section below). Given the following information on the market for green gage plums in the country under discussion: Short run supply of green gage plums: Qasr = -140,000 + 4000P Demand for green gage plums: Qd = 816,000 - 3600P (Note the quantity units in the market are different than those used in the firm level data - i.e. they are a different scale). (c) Is the country a net importer or net exporter at the current Pw? How much (quantity)? (d) Would you expect inefficient green gage plum farmers to be lobbying the government for protection? Why? (e) If the government was considering implementing a tariff to increase the incomes of inefficient green gage plum farmers, how large a tariff would be required to prevent inefficient green gage plum farmers from leaving the industry. Why? (1) Calculate the short run change in producers surplus that would arise from the imposition of the tariff. (g) Calculate the short run change in consumers surplus that would arise from the imposition of the tariff. (h) Calculate the one period revenue the government would collect from imposing the tariff 41213 Rotate Right Audio & Video Insert Wew Comment Link advanced_microecon... Carbaugh, Int'l Econo... economic analysis for t... Set06-Tar.pdf AREC 855 - Module 2 - IT Calculate the SOIL TUI change m proucis surprus wat woulu TSC TUTTI imposition of the tariff. (g) Calculate the short run change in consumers surplus that would arise from the imposition of the tariff. (h) Calculate the one period revenue the government would collect from imposing the tariff. (i) Calculate the value of the short run dead weight loss arising from the imposition of the tariff. 6) Calculate the value of the short run change in total welfare as a result of the imposition of the tariff. (k) Calculate the one period profit or loss that efficient firms would experience as a result of the imposition of the tariff. (1) If the current and expected future interest rate is 6.2 percent and the tariff was expected to be in place in perpetuity, calculate the increase in the value of fixed assets that efficient farms can expect to realize as a result of the policy. (m)If additional land suitable for green gage plum production is readily available. what would you expect to happen in the green gage plum industry over the long run? Why? economic analysis for L.. Setoa Tar.pdf Carboh, Intl Econo... n) It the market moves to a long run equilibrium over time and the government adjusts its policy to reflect the change; i.e. keeping price high enough to prevent the exit of inefficient farms, what will be the quantity of green gage plums imported or exported? (0) Calculate one period government revenue or expenditure in long run equilibrium. (p) What is the effect on consumers surplus of moving from the short to the long run? Explain (q) At the WTO, there has been a proposal put forward by traditional green gage plum exporters to cut support to green gage plum farmers by an amount that would equal 30 currency units per unit of quantity. Calculate the effect of this change on the value of fixed assets of efficient farms. What would you expect an industry group representing efficient farms to advise the Ministers of Agriculture and Trade regarding the proposal? (1) What would be the effect on inefficient farms of the proposed change in trade policy outlines in section (q). Explain. 41213 economic analysis for L.. Setoa Tar.pdf Carboh, Intl Econo... n) It the market moves to a long run equilibrium over time and the government adjusts its policy to reflect the change; i.e. keeping price high enough to prevent the exit of inefficient farms, what will be the quantity of green gage plums imported or exported? (0) Calculate one period government revenue or expenditure in long run equilibrium. (p) What is the effect on consumers surplus of moving from the short to the long run? Explain (q) At the WTO, there has been a proposal put forward by traditional green gage plum exporters to cut support to green gage plum farmers by an amount that would equal 30 currency units per unit of quantity. Calculate the effect of this change on the value of fixed assets of efficient farms. What would you expect an industry group representing efficient farms to advise the Ministers of Agriculture and Trade regarding the proposal? (1) What would be the effect on inefficient farms of the proposed change in trade policy outlines in section (q). Explain. 41213