Explain what happens to price that domestic sellers charge

Reference no: EM13204959

1.) Suppose the government allows imports of rice into the United States. If the world price is $2 per pound, what happens to the price that domestic sellers charge and what is the quantity of imports?
A) The price that U.S. sellers charge is still $4, and the import amount is 12 million pounds.
B) The price that U.S. sellers charge falls to world price, and the import amount is 16 million pounds.
C) The price that U.S. sellers charge falls to world price, and the import amount is 12 million pounds.
D) The price that U.S. sellers charge is between $4 and $2, and the import amount is between 2 and 12
million pounds.

2.) Suppose the government allows imports of rice into the United States. If the world price is $2 per pound, consumer surplus is $______ million and producer surplus is $_____ million.
A) CS=$18; PS=$9 B) CS=$32; PS=$4 C) CS=$9; PS=$18 D) CS=$16.5; PS=$12.5

3.) Suppose the government allows imports of rice into the United States. If the government decides to import a tariff of $1.5 on rice imports, the quantity demanded and quantity supplied by Americans are ______ and _____ million pounds, respectively.
A) 7; 10 B) 10; 7 C) 12; 6 D) 14; 5

4.) Suppose the government allows imports of rice into the United States. If the government decides to import a tariff of $1.5 on rice imports, what happens to the domestic and what is the quantity of imports?
A) The domestic price increases to $3, and 6 million pounds of rice will be imported.
B) The domestic price increases to $3.5 and 6 million pounds of rice will be imported.
C) The domestic price increases to $3.5 and 3 million pounds of rice will be imported.
D) The domestic price increases to $4 and all rice will be produced by domestic sellers.

5.) Suppose the government allows imports of rice into the United States. If the government decides to import a tariff of $1.5 on rice imports, consumer surplus is $______ million and producer surplus is
$_____ million.
A) CS=$7.5; PS=$12.25 C) CS=$16; PS=$18
B) CS=$32; PS=$4 D) CS=$12.5; PS=$12.25

6.) Suppose the government allows imports of rice into the United States. If the government decides to import a tariff of $1.5 on rice imports, the deadweight loss created is$_____. The government's tariff
revenue is $_____.
A) DWL=$6.5; GTR=$4.5 C)DWL=$2.25; GTR=$ 6
B) DWL=$12; GTR=$6 D)DWL=$6.75; GTR=$4.5

Reference no: EM13204959

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