27Sep07_lecture_exercise - c. Determine the consumer...

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AEM 230 / ECON 230 lecture 27 September, 2007 Argentina International market Brazil Below you find the demand and supply equations for corn in Brazil and Argentina (both are large countries): Argentina: Q S = 2P Q D = -2P + 400 Brazil: Q S = 2P - 200 Q D = -2P + 800 1. Assume no trade a. Determine the equilibrium prices and quantities in Argentina and Brazil b. Determine the consumer surpluses, producer surpluses and (total) welfare gains in Argentina and Brazil 2. Assume Argentina and Brazil trade a. Which country will be the importer? Which country will be the exporter? b. Derive the excess supply and demand curve for the international market and solve for the equilibrium international price and quantity
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Unformatted text preview: c. Determine the consumer surpluses, producer surpluses and (total) welfare gains in Argentina and Brazil d. Calculate the net welfare gains from trade e. Calculate the importer and exporter gains 3. Assume the importer imposes a tariff of $50 per unit imported a. Derive the new domestic prices and quantities traded in Argentina and Brazil b. Determine the consumer surpluses, producer surpluses and (total) welfare gains in Argentina and Brazil c. Calculate the net welfare change as a result of imposing the tariff d. How would the results change if there was no import tariff but a transportation cost of $50 per unit traded?...
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