Welfare effects of tariff and price difference in exporting

Assignment Help Macroeconomics

Reference no: EM1313350

The Lexus LS 430, the top of the line Lexus sedan, riad a base price in Canada of C$85,700 during the fall of 2005. Restated in US dollars using the exchange rate prevailing then, that price is $71,885. In the US during the fall of 2005, the same car had a base price of $56,525. Thus, the LS 430 was 27 percent more expensive in Canada, a difference that is substantial even after recognizing that Toyota could export cars from Japan to the US duty free but had to pay a 6.1 percent tariff on cars exported to Canada. (The LS 430 is produced only in Japan.) The Canadian government helped to maintain this price difference by making it very costly and administratively difficult for a Canadian to buy a car in the US and then import it for use in Canada. Explain whether the US-Canadian price difference implies that Toyota would have earned greater profit shipping more of the LS 430 models to Canada and less to the US. Construct a diagram to illustrate your answer.

Reference no: EM1313350

Questions Cloud

Finding degree of confidence for interval : Use value you found in part a to find out degree of confidence for interval 65.65

Specialization and gains from trade : Robin and Terry are Stranded on a deserted island and consume two products, coconuts and fish. In a day, Robin can catch 2 fishes or gather 8 coconuts, and Terry can catch 1 fish or gather 1 coconut.

Make a reconcilliation of master budget operation income : Make a reconcilliation of Master Budget Operation Income, Flexible Budget Operating,and Actual Operating Income. Your reconcilliation should be properly headed and presented

Important indicators the federal reserve system : Explicate 2 important indicators the Federal Reserve System will use to analyze this particular economic situation.

Welfare effects of tariff and price difference in exporting : The Lexus LS 430, the top of the line Lexus sedan, riad a base price in Canada of C$85,700 during the fall of 2005. Restated in US dollars using the exchange rate prevailing then, that price is $71,885.

The wheel has constant negative an angular acceleration : A rectangular block of ice 7.00 m on each side and 1.80 m thick floats in sea water. The density of the sea water is 1025 kg/m3. The density of ice is 917 kg/m3. How high does the top of the ice block float above the water level.

Probability-median of the sample : Which is the probability that the median of the sample is between $17 and $20?

Calculation of pv of future annuity payments with pv tables : Calculation of PV of future annuity payments with PV tables and what is the current value of the future payments

The demand for internet advertising was declining : the demand for Internet advertising was declining at the similar time which the number of Internet sites accepting advertising was increasing

User Account

All Pages