Hw Ch 9 #1-8

Hw Ch 9 #1-8 - Hw Ch 9 #1-8 #1 a) b) c) d) e) #2 a) b) c)...

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Hw Ch 9 #1-8 #1 a) b) c)
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d) e)
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#2 a) b)
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c) d)
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e) The gains from trade are higher under a monopoly. This is because a monopoly will produce where MR = MC. At this point, quantity of goods in available at home is not optimal. With trade, the country can import from abroad at Pw and Consumers gain back the DWL and the gains from trade from perfect competition. #3 a) Tariff t in a small country with perfect competition b) Tariff t in a small country with a Home monopoly c) Quota with the same imports M in a small country, with a Home monopoly d) Tariff t in a country facing a Foreign monopoly. depends C<A=B <D
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A = B because a home monopoly has reduced market power when subjected to international trade. It therefore acts as a competitive firm and sells where Pw = MC. When a tariff is imposed, the government collects “c” and the monopoly or competitive firms collect “a.” In both A and B, there is a DWL of –(b + d). The tariff eliminates the DWL from a monopoly, this is why A = B. Under C, a monopoly produces where the MR of effective demand = the MC of the monopoly. The monopoly charges a higher price than a tariff given the same level of imports and quantity demanded domestically decreases. This results in a higher DWL than A and B.
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Hw Ch 9 #1-8 - Hw Ch 9 #1-8 #1 a) b) c) d) e) #2 a) b) c)...

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