HW3 Answers - ECON 1014 HOMEWORK#3 Chapter 9 Figure Foreign...

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ECON 1014 HOMEWORK #3 Chapter 9 Figure: Foreign Trade Score ______ / 20 1. Refer to Figure: Foreign Trade. a. What quantity would be traded in a free-trade environment? Remember units!! (1 pt.) 180 million units (-1/2 if “millions” are not specified)
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b. If this country chooses to engage in international trade, what quantity would be produced domestically ? What quantity would be imported ? Remember units!! (2 pts.) 40 million units produced domestically (1 pt. for each, -1/2 if “millions” are not specified) 180-40 = 140 million units imported (1 pt. for each, -1/2 if “millions” are not specified) c. Suppose the government imposed a $30 tariff on imports. On the graph, draw and label the new world supply with tariff. Label the regions that correspond to tariff revenues , wasted resources, and DWL . (2 pts.) (See graph; 1 pt. for Tariff; 1/2 pt. for Revenues; 1/2 pt. for DWL and Wasted Resources) d. Compute the DWL caused by the tariff and compute government tariff revenues . Remember units!! (2 pts.) DWL = (180-150)*($90-$60)*0.5 = $450 million (1 pt.,
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