ECON0301 HW4

ECON0301 HW4 - ECON0301 Assignment #4 Wong Yik Fung,...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON0301 Assignment #4 Wong Yik Fung, Patrick UID: 2008018003 1. Based on the information, we cannot tell if Macedonia gains or loses. In this case, both trade creation and trade diversion occur. There is 30 tons of imports from Russia have been diverted to the Europe, but 40 tons of imports have been created in Europe. However, we have to consider on the cost of Russian imports. If it is just a bit lower than the Europe’s, the trade diversion does not hurt much and Macedonia gains; if it is a lot lower, it makes Macedonia loses 2. (a) It imports from Brazil because the cost of stoves from Brazil is lower. (Brazil = $520, US = $650) (b) (i) The imports from US without tax ($500) will be cheaper than the imports from Brazil ($520). So, the domestic price decreases as cost of imports decreases. (ii) As the domestic price decreases, domestic producers tend to produce less while the consumers consume more. Therefore, quantity of stoves imported increases. (iii) As cost of imports from US is lower than Brazil, all imports will be
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

ECON0301 HW4 - ECON0301 Assignment #4 Wong Yik Fung,...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online