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BA 372 Lesson 1 Assignment 8

BA 372 Lesson 1 Assignment 8 - subsidize the export of...

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Ashley B. 258-10-0169 July 5, 2010-October 22, 2010 BA 372 Lesson#4, Assignment 8 1. What is the difference between the unilateral and multilateral approaches to achieving free trade? Give an example of each. 2. Consider a country that imports a good from abroad. For each of the following statements, say whether it is true or false. Explain your answer. A. "The greater the elasticity of demand, the greater the gains from trade." B. "If demand is inelastic, there are no gains from trade." C. "If demand is inelastic, consumers do not benefit from trade." 3. Consider a small country that exports steel. Suppose that a "pro-trade" government decides to
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Unformatted text preview: subsidize the export of steel by paying a certain amount for each ton sold abroad. How does this export subsidy affect the domestic price of steel, the quantity of steel produced, the quantity of steel consumed, and the quantity of steel exported? How does it affect consumer surplus, producer surplus, government revenue, and total surplus? Is it a good policy from the standpoint of economic efficiency? (Hint: The analysis of an export subsidy is similar to the analysis of a tariff.)...
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