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Problem: A country imports 3 billion barrels of crude oil per year and domestically produces another 3 billion barrels of crude oil per year. The world price of crude oil is $90 per barrel. Assuming linear curves, economists estimate the price elasticity of domestic supply to be 0.25 and the price elasticity of domestic demand to be 0.1 at the current equilibrium.
The reduction in the country's demand for imports may affect the world price of crude oil. Assuming that the import fee reduces the world price from $90 to $80 per barrel, and thus, the after-tax domestic price is $80 + $30 = $110 per barrel, a net increase in domestic price of $20 per barrel
Determine the quantity consumed, the quantity produced domestically, and the quantity imported after the imposition of the import fee. Then estimate the annual social benefits of the import fee
Re-estimate the social net benefits assuming that 20 percent of the increase in producer surplus is realized as tax revenue under the existing tax system, assume that increases in tax revenues less the cost of administrating the import fee are used to reduce domestic taxes.
Subjective definition of probability is:Select one:A. a weighted average of different peoples' degrees of certainty of an event's occurringB. a theoretical probability distributionC. a person's degree of certainty of an event's occurringD. an expecte..
As a bench mark, during a "typical" U.S. recession we should expect the unemployment rate to rise to about.
Assume that no banks hold excess reserves, and the public holds no currency. If a bank sells a $100 security to the Fed, explain what happens to this bank and three additional steps in the deposit expansion process, assuming a 10% reserve requirement..
Imagine that you have critical information which must be spread throughout your organization as rapidly as possible, by word of mouth. If you have to choose exactly one of the following criteria in deciding whom to tell first, which would best furthe..
Part 1: How does specialization lead to economies of scale? Part 2: Distinguish diminishing returns from diseconomies of scale. Why do some firms experience diseconomies of scale?
rom the Blades' Use of Long-Term Financing case study, formulate an overall corporate financial strategy to support the long-term financing of Blades, Inc.
What are the potential long term problems for unions in agreeing to labor-management cooperation programs?
Explain the problems with the existing design, in terms of the potential modification anomalies that it might exhibit.
Interest rates on U.S. treasury bills are typically much lower than interest rates on U.S. treasury notes and bonds. If the federal government wants to reduce the interest charges it pays when it barrows money, why doesn't the treasury stop selling t..
Because of the decreasing labor force participation rate of youths and the prime age group, the overall labor force participation rate is expected to decline. The participation rates of older workers are projected to increase, but remain significantl..
A monopolist faces the following demand curve: P = 120 - .02Q . The firms cost function is given by C = 60Q + 25; 000: Assume that the firm maximizes profits. What is the level of production, price, and total profit per week? What will be the level o..
If the dollar appreciates against the pound, will a dollar buy more than or less than 0.77 pounds? Will a pound buy more or less than $1.30?
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