Homework 6 31-34 -...

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Homework 6 Submitted by deweerdt@msu.edu on 10/9/2008 12:25:40 PM  Points Awarded  19 Points Missed  0 Percentage  100% 1. Consider the U.S. demand and supply for good X: Which of the following import demand curves is consistent with the U.S. market for this good?  
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A. MD 1 B. MD 2 C. MD 3 D. MD 4 The autarky price occurs where the domestic demand and supply intersect.  In this example, the  autarky price is 24.  At this price, the quantity of imports demanded is zero, therefore this is the  intercept of the MD curve.  At a price of 20, quantity demanded is 72, quantity supplied is 24.  The  difference is 72 - 24 = 48.  This is the quantity that is imported.  A second point on the MD curve is  then P = 20, Q = 48. Points Earned: 1/1 Correct Answer: B Your Response: B
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2. Consider the U.S. demand and supply for good X:   Which of the following export supply curves is consistent with the U.S. market for this good?  
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A. XS 1 B. XS 2 C. XS 3 D. XS 4 The autarky price occurs where the domestic demand and supply intersect.  In this example, the  autarky price is 65.  At this price, the quantity of exports supplied is zero, therefore this is the intercept  of the XS curve.  At a price of 70, quantity demanded is 13, quantity supplied is 39.  The difference  is 39 - 13 = 26.  This is the quantity that is exported.  A second point on the XS curve is then P = 70, Q  = 26. Points Earned: 1/1 Correct Answer: A Your Response: A
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3. Suppose that in the absence of trade, the price of lamb in Australia would be $4 per pound in Australia and $15 per poun in the United States.  Further suppose that if trade were permitted, Australia would export 400 tons of lamb to the United States. Which of the following graphs accurately represents the information contained in this problem? A. Graph 1 B. Graph 2 C. Graph 3 D. Graph 4 The autarky (no-trade) prices in the two countries are represented by the intercepts of the import- demand and export-supply curves.  These are the prices at which the two countries would neither 
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import nor export lamb ($4 for Australia, $15 for the United States).  Starting from the intercept for the  United States, lower prices encourage more imports--the import-demand curve is downward-sloping.   Starting from the intercept for Australia, higher prices encourage more exports--the export-supply  curve is upward-sloping. In all cases, the quantity traded is 400.
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This note was uploaded on 02/25/2011 for the course ECON 340 taught by Professor Leidholm during the Spring '08 term at Michigan State University.

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Homework 6 31-34 -...

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