Draw a graph and use it to explain the impact of trade

Assignment Help Macroeconomics
Reference no: EM132194164

Question 1 -

Australia and Canada have a free trade agreement in which, Australia exports beef to Canada.

a. Draw a graph and use it to explain and illustrate the impact of trade on consumers, producers and the Australian economy.

b. Now Canada imposes an import quota on Australian beef. Draw a graph and explain how this quota would influence the following factors in Canada: (i) price of beef; (ii) consumer surplus (CS) and producer surplus (PS); (iii) beef importers' gain; (iv) Efficiency of the beef market.

c. The volume of import quota on Australian beef is less than Australia's total export volume of beef to Canada. Explain how this import quota would influence the following factors in Australia: (i) quantity of beef exported to Canada; (ii) price of beef; (iii), consumer surplus (CS) and producer surplus.

d. Suppose that the government decides to subsidise exports of beef by paying a certain amount for each tonne sold overseas. Explain how the export subsidy would affect the following factors in Australia: (i) domestic price of beef; (ii) the quantity of beef produced; (iii) the quantity of beef consumed, and the quantity of beef exported; (iv) consumer surplus, producer surplus, and government revenue.

Question 2 -

"More than one billion of cups of coffee are consumed in Australia's cafes, restaurants and other outlets each year, an increase of 65 per cent over 10 years. People are drinking less 'instant coffee' as espresso becomes more popular and new speciality coffee shops have been popping up all over Australia to satisfy demand for daily caffeine fix. Not only are people drinking more coffee, they are becoming more coffee-savvy and want premium brew even if it costs more."

Answer the following questions after reading the news clip above.

a. How would you classify the espresso coffee market; are firms price takers or price makers? Explain.

b. With the aid of an appropriate economic model, explain why there has been such an explosion in the number of coffee chains in Australia over the past ten years.

c. Would firms in the market making positive economic profit in the long run? Explain.

d. Would the impact of government subsidy to each existing firm change your answer in part (c) in the short run? Explain.

Question 3 -

Suppose the tea market can be described by the following equations:

Demand: P = 10 - Q

Supply: P = Q - 4

Where, P is the price in dollars and Q is the quantity in kilograms.

a. What is the equilibrium price and quantity?

b. Suppose the government grants a subsidy of $1 per kilogram of tea produced. What will the new equilibrium quantity be? What price will the buyer pay? What amount per kilogram (including the subsidy) will the seller receive? What will be the total cost to government?

c. Draw the demand and supply diagram of the tea market and indicate the results in parts (a) and (b) on it.

Reference no: EM132194164

Questions Cloud

In which respect does iraq have very shallow roots : Explain how this feature has constituted an obstacle to the country's political and economic development?
Discuss about the association between cost and quality : In reality, the association between cost and quality probably falls between these 2 extremes, that some types of health care costs are associated with high.
Impact csr-people within corporations : Who is in the best position to impact CSR-people within corporations, NGOs, government, or others?
How would you describe the impact of google : How would you describe the impact of Google, Amazon, and Walmart on CSR. What changes would you want to make, if any, on these oranization.
Draw a graph and use it to explain the impact of trade : Draw a graph and use it to explain and illustrate the impact of trade on consumers, producers and the Australian economy
Balance sheet and income statement : These costs are clearly stated in the balance sheet and income statement.
Review problem on pharmacotherapeutics for depression : Margo is a 49-year-old divorced woman who works as a bank teller. She tells her primary care provider (PCP) that she feels tired all the time.
What strengths exist for the organization : What strategic alternatives are available to the organization? What are the pros and cons of these alternatives?
Large to be impacted by csr : How size matters-are companies too small or too large to be impacted by CSR? Should there be a limit on how big a private organization can become?

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd