Why is market likely to be characterized by two-way trade

Assignment Help Business Economics

Reference no: EM13981917

Assume that the world market for producing radios is monopolistically competitive. Suppose that the price of a typical radio is $25.

a. Why is this market likely to be characterized by two-way trade?

b. Suppose that Country A levies a tax of $5 on each radio produced within its borders. Will radios continue to be produced in Country A? If they are, what will happen to their price? If they are not, who will produce them?

c. If you concluded that radios will continue to be produced in Country A, explain what will happen to their price in the short run. Illustrate your answer graphically. d.What will happen to their price in the long run?

Reference no: EM13981917

Questions Cloud

Within the balance of payments : Within the balance of payments, if the current account has a deficit of US$2.2billion, the capital account

Explain how the global supply chain functions : Explain how the global supply chain functions of (a) logistics and (b) purchasing can be used strategically leverage the global supply chains for a manufacturing company producing mobile phones.

Research report-what type of breakfast do you prefer : Interview 10 people on "What type of breakfast do you prefer," and prepare a basic research report. Conclusion: Discuss your findings, state whether your initial hypothesis was correct or not, and provide a rationale for your answer. Also, provide de..

Dairy operates in a perfectly competitive marketplace : Joe Brown’s dairy operates in a perfectly competitive marketplace. Joe’s machinery costs $500 per day and is the only fixed input. His variable costs are comprised of the wages paid to the few workers he employs at the dairy and the grain he feeds to..

Why is market likely to be characterized by two-way trade : Assume that the world market for producing radios is monopolistically competitive. Suppose that the price of a typical radio is $25. Why is this market likely to be characterized by two-way trade? If you concluded that radios will continue to be prod..

Regards to the development current labor policy : What is significant about each of the following pieces of legislation with regards to the development current labor policy in the US?

With trade-pound of mutton exchanges for bushel of wheat : Assume that trade opens between Argentina and New Zealand and that, with trade, a pound of mutton exchanges for a bushel of wheat. Before trade, Argentina produced at point A and New Zealand produced at point C. Argentina moves to point B, while New ..

What is the opportunity cost of producing each good : Argentina and New Zealand each produce wheat and mutton under conditions of perfect competition, as shown on the accompanying production possibilities curves. What is the opportunity cost of producing each good in Argentina? Explain how international..

Study of the demand for air pollution : Figure 7.1 is drawn from Harrison and Rubinfeld’s study of the demand for air pollution in Boston. Make a copy of Figure 7.1 and then estimate the total willingness to pay, for a household earning $15,000 per year, or reducing NOx levels from 6 to 4 ..

User Account

All Pages