Question

Explain why the following statements are true or false:                                 &n

Explain why the following statements are true or false:                                                       

A: Exporting a good reduces consumer surplus therefore overall economic welfare decreases.                                                              

B: Importing a good reduces producer surplus therefore overall economic welfare decreases.                                                     

C: A tariff reduces imports, increases domestic production and producer surplus therefore overall economic surplus increases.       

D: Export subsidies increase both consumer and producer surplus thereof they improve overall net economic welfare. 


4.

Explain why the following statements are either true or false:

A: In a competitive labor market, a minimum wage above the market equilibrium will reduce the level of employment.

B: In a monopsony labor market, a minimum wage set above equilibrium will always reduce the level of employment.

C: In bilateral monopoly labor markets the monopsony employer and the union bargain to an outcome that is closer to a competitive equilibrium.

D: If two industries have identical labor supplies and operate in competitive labor markets then there is no reason for them to have different wage levels. 


0 0
Add a comment Improve this question
Answer #1

Sign Up to Unlock the answer FREE

Already have an account? Log in

1 )

A) True

Consumers of the exporting nation face reduced levels of well-being as well as increased levels of domestic price due to increasing exports and export subsidy. As the price levels in the domestic market rises, the consumer surplus reduced significantly.

B) True

Consumers importing goods reduces the sales of domestically manufactured goods as consumers face cheaper prices from international market commodities and hesitate from buying domestically manufactured goods due to the high price when compared to the price of foreign goods. This thus reduces the producer surplus as they now are forced to reduce their price as well.

C) True

Tariffs are imposed on imports which raise the price of the commodity. This puts the producer of domestically manufactured goods at an advantage and at a position to sell goods cheaper than imports and thus gain the market. Tariffs increase domestic production as demand for cheaper domestic goods rise within the market. Such a situation enables the consumer to get a good price as well as the producer to sell at a decent profit margin, thereby increasing economic surplus.

D) False

Export subsidies do not increase consumer surplus. Export subsidies are granted to producers as an effort to increase export volume. An export subsidy do not increase consumer surplus, and in fact reduces it as a result of increased price levels for domestically manufactured goods.

4)

A) True

A minimum wage above equilibrium level results in an increase in the number of workers supplied in the labor market. This thus results in excess supply of labor and creates unemployment in the labor market.

B) False

In a monopsony market, where there is one buyer and many sellers, there is one firm in the market with the power in employing the factors of production. In such cases, when the wage rate is higher than the equilibrium rate, the level of employment also rises due to the resultant increase in wages.

C) True

In a bilateral monopoly labor market is only one seller and buyer and at the same time in a monopsony, there is only one employer of factors of production. In such situations where the supply is also provided by a few firms, they tend to come into an agreement on wages and prices in order to keep the market close to a competitive equilibrium which is profitable for all parties in the market.

D) True

When there exists identical labor supply in two different industries, and the labor market is competitive in general, then both the industries tend to adopt the same wage rate and not employ labor at different wage rates. This case hold true given that the set of skill set for the labors for both the industries are same and constant. Let us see a diagram,

MARKET FOR LABOR INDUSTRY 1 INDUSTRY 2 S MARGINAL REVENUE PRODUCT(MRP) MRP WAGE RATE WAGE RATE E F W W D 0 Ov NUMBER OF LABOR

Add a comment
Know the answer?
Add Answer to:
Explain why the following statements are true or false:                                 &n
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Explain why the following statements are true or false:                                 &n

    Explain why the following statements are true or false:                                                        3) A: Exporting a good reduces consumer surplus therefor overall economic welfare decreases.                                                               B: Importing a good reduces producer surplus therefore overall economic welfare decreases.                                                      C: A tariff reduces imports, increases domestic production and producer surplus therefore overall economic surplus increases.        D: Export subsidies increase both consumer and producer surplus thereof they improve overall net economic welfare. 
     .    4) Explain why the following statements are either true or false: A:...

  • Explain why the following statements are true or false:                                 &n

    Explain why the following statements are true or false:                                                        A: Exporting a good reduces consumer surplus therefor overall economic welfare decreases.                                                                B: Importing a good reduces producer surplus therefore overall economic welfare decreases.                                                      C: A tariff reduces imports, increases domestic production and producer surplus therefore overall economic surplus increases.         D: Export subsidies increase both consumer and producer surplus thereof they improve overall net economic welfare. 


  • 3)      Explain why the following statements are true or false:                            &nbs

    3)      Explain why the following statements are true or false:                                                        A: Exporting a good reduces consumer surplus therefor overall economic welfare decreases.                                                                B: Importing a good reduces producer surplus therefore overall economic welfare decreases.                                                      C: A tariff reduces imports, increases domestic production and producer surplus therefore overall economic surplus increases.         D: Export subsidies increase both consumer and producer surplus thereof they improve overall net economic welfare. 


  • 4) Explain why the following statements are either true or false: A: In a competitive labor...

    4) Explain why the following statements are either true or false: A: In a competitive labor market, a minimum wage above the market equilibrium will reduce the level of employment.         B: In a monopsony labor market, a minimum wage set above equilibrium will always reduce the level of employment.           C: In bilateral monopoly labor markets the monopsony employer and the union bargain to an outcome that is closer to a competitive equilibrium.          D: If two industries...

  • 4) Explain why the following statements are either true or false: A: In a competitive labor...

    4) Explain why the following statements are either true or false: A: In a competitive labor market, a minimum wage above the market equilibrium will reduce the level of employment. B: In a monopsony labor market, a minimum wage set above equilibrium will always reduce the level of employment. C: In bilateral monopoly labor markets the monopsony employer and the union bargain to an outcome that is closer to a competitive equilibrium. D: If two industries have identical labor supplies...

  • 1. Evaluate whether the statement is true or false. Explain why Competitive firm never produces when it is making a...

    1. Evaluate whether the statement is true or false. Explain why Competitive firm never produces when it is making a negative profit. a. b. In cost minimization, as wage increases, a firm will always decreases labour input Long run market supply curve in perfect competition is horizontal C. d. If price is lower than equilibrium price, consumer surplus is higher than the equilibrium since consumers can enjoy lower price. 1. Evaluate whether the statement is true or false. Explain why...

  • HW Tariff: Large Country Case Suppose that there are only two trading countries: one importing country...

    HW Tariff: Large Country Case Suppose that there are only two trading countries: one importing country and one exporting country. The supply and demand curves for the two countries are shown below. Prr is the free trade equilibrium price. At that price, the excess demand by the importing country equals excess supply by the exporter. Welfare Effects of a Tariff: Large Country Case Importing Country Exporting Country P A D H b C C PT E PT C F G...

  • 3, (15%) For each of the following, write either True or False, and justify your answer . Suppose that under a free...

    3, (15%) For each of the following, write either True or False, and justify your answer . Suppose that under a free market, the Total Surplus is $3 million. Under a price ceiling, the Total Surplus drops to $2 million. Therefore, the Deadweight Loss is $1 million Minimum wage causes a reduction in profits, an increase in prices, or a decrease in employment or hours worked. A price ceiling causes a drop in Consumer Surplus. The Deadweight Loss is the...

  • 33. A product that has a negative income elasticity of demand is a. a complement good....

    33. A product that has a negative income elasticity of demand is a. a complement good. b. a normal good. c. a substitute good d. an inferior good. Suppose the Chicago Enforcers football team increases ticket prices by 10 percent and as a result the quantity of tickets demanded decreases by 7 percent. This response means that the demand for Enforcers tickets is a. unit clastic. b. elastic c. perfectly elastic. d. inelastic. 34. 35. When a market reaches allocative...

  • Which of the following statements correctly describes the relationship between the size of the deadweight loss...

    Which of the following statements correctly describes the relationship between the size of the deadweight loss and the amount of tax revenue as the size of a tax increases from a small tax to a medium tax and finally to a large tax? The size of the deadweight loss increases, but the tax revenue first increases, then decreases. Both the size of the deadweight loss and tax revenue increase. The size of the deadweight loss increases, but the tax revenue...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
Active Questions
ADVERTISEMENT