CHAPTER CHECKPOINT MyEconLab Chapter 18 Study Plan Study Plan Problems and Appli
ID: 1162448 • Letter: C
Question
CHAPTER CHECKPOINT MyEconLab Chapter 18 Study Plan Study Plan Problems and Applications Use Figures 1 and 2 to work Problems 1 to 4. Figure 1 and Figure 2 show the markets for shoes if there is no trade between the United States and Brazil. 1. Which country has a comparative advantage in producing shoes? With inter- national trade, explain which country would export shoes and how the price of shoes in the importing country and the quantity produced by the import ing country would change. Explain which country gains from this trade FIGURE 1 U.S. SHOE MARKET Price (delars per pair) 2. The world price of a pair of shoes is $20. Explain how consumers and pro- 30 ducers in the United States gain or lose as a result of international trade. On the graph, show the change in U.S. purchases, production, and the price of a pair of shoes 3. The world price of a pair of shoes is $20. Explain how consumers and pro- 4. Who in the United States loses from free trade in shoes with Brazil? Explain. 5. The supply of roses in the United States is made up of U.S.-grown roses and 10 ducers in Brazil gain or lose as a result of international trade. Show the change in Brazil's purchases, production, and the price of a pair of shoes. 10 Quantity (miltions of pairs per year) Use the following information to work Problems 5 to 7 FIGURE 2 BRAZIL'S SHOE MARKET Price (dollars per pair) imported roses. Draw a graph to illustrate the U.S. rose market with free international trade. On your graph, mark the price of roses and the quanti- ties of roses bought, produced, and imported into the United States. 6. Who in the United States loses from this trade in roses and would lobby for a restriction on the quantity of imported roses? Suppose that the U.S. gov- ernment put a tariff on rose imports. Show on your graph the effect of the 20 tariff on U.S. consumers and U.S. producers. Show the government's tariff revenue. 10 7. Suppose that the U.S. government puts an import quota on roses. Show on your graph the effect on the quantity bought by U.S. consumers, the quan- tity produced by U.S. rose growers, and the quantity imported. Quantity (millions of pairs per year)Explanation / Answer
2) At world price of $20 per pair of shoe the US suppliers supply 4 miilions and US consumers demand 8 million per year. Now earleur to international trade suppliers of US were selling 6 million at price of $30 having revenue of 30*6=180 millon dollar.
Now US sellers sell 4 million at $20 and get revenue as 20*4=80 million dollar.
Hneec US producers loose 180-80 = 100 million dollar.
On other hand US consumers were getting only 6 milluon shoes at $30 aand now they are getting 8 million pairs at $20. Hence they have gained.
The graph shows Pw as world price to which US producers start producing A that is 4 milliion than 6 million and consumers start demanding B that is 8 million than 6 million and the gap between demand and supply is filled by imports from Brazil. That is the excess demand of US consumers of 8 - 4 = 4 million (A-B) is fulfilled through imports from Brazil.
3) At world price of $20 per pair of shoe the Brazil suppliers supply 4 miilions and brazalian consumers demand 2 million per year. Now earleur to international trade suppliers of Brazallian were selling 3million at price of $10having revenue of 3*10=30 millon dollar.
Now sellers sell 4 million at $20 and get revenue as 20*4=80 million dollar.
Hneec Brazalian producers loogain 80-30 = 80 million dollar. as revenue.
On other hand Brazallian consumers were getting 3 milluon shoes at $10 aand now they are getting only 2 million pairs at $20. Hence they have lost.
The graph shows Pw as world price to which Brazallian producers start producing a that is 4 milliion than 3 million and consumers start demanding b that is 2 million than 3 million and the gap between demand and supply is filled by export from Brazil. That is the excess supply of Brazallian producers of 4-2 = 2 million (A-B) is fulfilled through exports from Brazil.
4) The producers in US looses becaus eof free trade because earlier to free trade they were sellling shoes at higher rate to which they were getting more producer surplus than now. Now because of free trade the brazallian producers supply at lower rate to which much demand of US producers has lost causing lost in producer surplus.