Two countries produce and consume T-shirts: the US and the ROW. Problems 1-2 are based on...
Two countries produce and consume T-shirts: the US and the ROW. Problems 1-2 are based on the supply and demand schedules for the two countries given below. Note: The supply and demand curves are straight lines. Quantities are in millions of T-shirts. US ROW 32 13 28 26 10 18 12 12 13 10 13 14 15 16 Suppose that the two countries open to trade. Describe an arbitrage strategy that will allow you to profit from the price differential...
Two countries produce and consume T-shirts: the US and the ROW. Problems 1-2 are based on the supply and demand schedules for the two countries given below. Note: The supply and demand curves are straight lines. Quantities are in millions of T-shirts. US ROW 32 13 28 26 10 20 18 12 12 13 14 15 This problem asks you to examine the welfare effects of opening trade between the two countries. Please draw new graphs (separate from question I)....
a. Draw the supply and demand curves for the US market under autarky (no trade) Note the equilibrium price and quantity b. Draw the supply and demand curves for the ROW market under autarky (no trade). Note the equilibrium price and quantity. Suppose that the two countries open to trade. Describe an arbitrage strategy that will allow you to profit from the price differential between the two markets. Be sure to explain how it will work d. Draw the import...
1. Two countries produce and consume T-shirts: the US and the ROW. The following table gives the supply and demand schedules for T-shirts for the two countries. Note: Quantities are in millions and the supply and demand curves are straight lines over the range of prices given in the table. Be sure to label the relevant prices and quantities, including the P-intercepts. a. (3 points each.) Draw the appropriate supply and demand diagrams under the assumption that there is free...
Two countries produce and consume T-shirts. This question is based on the international market depicted on the right. Assume transportation costs are $18. a. What is the price in the importing country? b. What is the price in the exporting country? c. What is the volume of trade? d. How much is spent on transporting T-shirts between the two countries? (Give a $ value.) e. How much does the exporting country gain from trade? (Give a $ value.) P ($)...
The diagram above represents the market for T-shirts in the US, a small country. Vietnam can produce T-shirts at a constant cost of $6 per T-shirt. Mexico can produce T-shirts at a constant cost of $7 per T- shirt. Initially, the US has a $4 tariff per T-shirt. US consumers regard T-shirts made in the US, Vietnam, and Mexico as identical. From which country will the US import T-shirts? Briefly explain Draw a supply and demand diagram for the US...
There are two countries (Country X and Country Y) and two goods (T-shirts and calculators). Country X imports T-shirts and exports calculators and Country Y exports T-shirts and imports calculators. The diagram on the right depicts the international market for T-shirts. A calculator costs $90. Under free trade, what is Country X’s terms of trade? (Give a numerical answer.) If Country X imposes a $6 tariff on T- shirts, what are its new terms of trade? (Give a numerical answer....
5. Problems and Applications Q5 The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $20, and the equilibrium quantity is 3 million T-shirts. One day, after reading Adam Smith's The Wealth of Nations while on vacation, the president decides to open the Textilian market to international trade. The market price of a T-shirt falls to the world price of $16. The number of T-shirts consumed in Textilia rises to 4 million,...
Consider two countries and a single good produced competitively. At Home, the supply and demand curves for this good are given by the following expressions where q' is quantity supplied and is quantity demanded: q"(p) = 100 + 2002 (P) = 1900 - 400p. In the foreign country, these curves are given by the following expressions where asterisks denote that they are foreign q** (P) = 100p q4*(p) = 600 -200p. 1. Solve for the closed economy (autarky) equilibrium price...
5. Problems and Applications Q5 The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $24, and the equilibrium quantity is 4 million T-shirts. One day, after reading Adam Smith's The Wealth of Nations while on vacation, the president decides to open the Textilian market to international trade. The market price of a T-shirt falls to the world price of $16. The number of T-shirts consumed in Textilia rises to 8 million,...