International Trade And Trade Policy

Question 1 . In the small country study , the importing country cannot affect the foreign export tolls . This is ascribable its smallness of share of the humans market for the salutarys that it importy Before the duty was implemented , the touchstone demanded for the healthy was at D1 while the quantity supplied of the good is at S1 at the price level P1 , the world price . There is excess demand for the good , so the country imports from other countries . The descend of the good imported is br the gap amid D1 and S1 . When the tariff was implemented , the price of the good in the domestic country increased from P1 to Pt . This generate a decrease in the amount demanded for the good from D1 to D2 . The high price also attracts producers to increase the quantity supplied of the good from S1 to S2 . The amount of the good imported after the tariff is the difference between D2 and S2 . The gap in this cause is smaller as compared to the case when there are no tariffs , and this means the amount of the good imported by the country decreasesQuestion 2 . Given : free trade price of car 10 ,000 , Value of blade 5 ,000Tariff on car imports : 25EPR (Vt - Vw / Vw , where Vt range-added with a tariff and Vw value added without the tariff (Value-added firms sales - purchases from other firmsA . EPR without tariff on make B . EPR with 20 tariff on firebrand importsVw 10 ,000 - 5 ,000 5 ,000 Price of steel 5 ,000 (0 .2 5 ,000Price of car 10 ,000 (0 .

25 10 ,000 5 ,000 1 ,000 10 ,000 2 ,500 6 ,000 12 ,500 Vt 12 ,500 - 6 ,000 6 ,500Vt 12 ,500 - 5 ,000 7 ,500 EPR 6 ,500 - 5 ,000 5 ,000EPR 7 ,500 - 5 ,000 5 ,000 1 ,500 5 ,000 2 ,500 5 ,000 EPR 0 .3 or 30EPR 0 .5 or 50C . EPR without tariff on steel and bull D . EPR with 20 and 15 tariffGiven : Value of copper 2 ,000 on steel and copper , respectivelyVw 10 ,000 - 5 ,000 - 2 ,000 3 ,000 Price of steel 5 ,000 (0 .2 5 ,000Vt 12 ,500 - 5 ,000 - 2000 5 ,500 6 ,000EPR 5 ,500 - 3 ,000 3 ,000 Price of copper 2 ,000 (0 .15 2 ,000 2 ,500 3 ,000 2 ,300EPR 0 .8333 or 83 .33 Vt 12 ,500 - 6 ,000 - 2 ,300 4 ,200EPR 4 ,200 - 3 ,000 3 ,000 1 ,200 3 ,000EPR 0 .4 or 40Question 3 . Terms-of-trade argument for protection states that it is possible for the terms-of-trade benefits to outweigh the strength losses from a tariff . Terms-of-trade benefits are generated from the lower price of imports in the exporting country because of the tariff set by a large country . It argues that there is an optimum tariff where the...If you want to get a full essay, order it on our website: Orderessay

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