Homework 2

Homework 2 - mwnwamhmm..mmn ‘ ARE 138 HOMEWORK 2 Winter...

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Unformatted text preview: mwnwamhmm..mmn ‘ ARE 138 HOMEWORK 2 Winter 201 1 Due Thursday, Feb. 3rd, in class (you may want to make a copy to study for midterm) 1. Use the 2011 U.S. Harmonized Schedule of Tariffs to answer the following questions. It can be accessed at: http://www.usitc.gov/tata/hts/bychapter/index.htm a. US. tariff schedules list 3 types of tariff rates: (Column la) Normal trade relations rates, labeled “general”; (Column 1b) “special” rates; (Column 2) rates for other trading partners. In the chapter titled “General Notes", find what these abbreviations for “special” trading partners stand for: A, AU, CA, CL, D, E, IL, J, JO, MX, P, R, SG (Highlighting the relevant lines of a printout is okay, or write by hand. There is one page that lists them all, so they can be printed on a single sheet.) There are other special categories in addition to these, but these are the main ones that pertain to the commodities we're studying. b. Explain briefly the difference between the A, A* and A+ designation. What are the first 5 countries listed under the A designation? Of these 5, which are also included under the. A+ designation? c. What 3 countries are included under the Andean Trade Preference Act? What are the first 5 countries listed under the Caribbean Basic Economic Recovery Act (CBERA)? What are the first 5 countries listed under the African Growth and Opportunity Act? d. What countries fall under category 2 (other trading partners)? (look closely to find these!) 2. a. Find the current US tariff rates for these commodities and related products, for "general" and "special" columns. Note whether tariffs are specific or ad valorem. It is okay to omit writing the column 2 tariffs down, since little or no product volume actually enters the US under these rates. For starred items, also find the import quota allocations, which are shown in the beginning of each chapter. Almonds-shelled 0802.12.00 Bananas 0803.00.20 Beef-flesh or chilled carcass or 1/2-carcass 0201 . 1005* Also, what is the total quota limit for importing beef? (Find how many metric tons are allowed to be imported, then add the quota allocations up for the various exporting nations.) Additionally, what nations are exempt from this quota? Broccoli and cauliflower 0704.10 (several rates, depending on season) Cheddar cheese 0406.10.24“ Also, what is the total quota amount, in kg., for Cheddar cheese? What country has the largest share of this quota? What other country is not subject to the quota? (note there are separate quotas for various other kinds of cheeses, we don't need to list them here). Coffee-roasted, not decaf. 0901.21.00 Coconuts, dessicated 0801.11.00 Crabmeat-fiozen 0306.14.20 Crude oil 2709.00.20 Gold bars 7108.13.55 Grapes-fresh 0806.10 (several rates, depending on season) Olives, pitted or stuffed 0711.20.40 Oranges 0805.10.00 Psittaciformes (live parrots, parakeets, cockatoos, macaws) 0106.32.00 Cane sugar 1701.11.10“ Also, show the total quota amount, and the tariff rate 1701.1 1.50 for over-quota amounts Salt 2501.00.00 Wheat, durum 1001.10.00 2b. Now look at the tariffs you found above for almonds, bananas, broccoli, coconut, grapes, olives and oranges. Which of these products have a significant domestic production sector? (hint, which ones are not able to be grown commercially in CA?) What does this suggest about the main motivation for imposing these tariffs? 3. Suppose US demand for coconuts is Dus = Dm = 1,000,000 - 800,000P (we assume there is no domestic production, so import demand equals total demand). Suppose the excess supply for the rest of the world is: Sx = 1,200,000 P. a. What is the US price, and the quantity of imports, under free trade? What is US consumer surplus? What is foreign producer surplus from trade? . b. Now suppose the US imposes a 20-cent tariff per pound of coconuts imported. What does this do to the equilibrium price in the foreign country? How much do US consumers pay per pound, and how many are purchased? What is the tariff revenue collected by the US government? Sketch a graph showing the effect of this policy. On balance, what is the US welfare gain or loss from this policy? What is the welfare effect on foreign producers? 0. Now suppose the US instead imposed a 10% ad valorem tarifi'. What is the new equilibrium price in the foreign country? What is the US price, and the quantity imported. (You don't need to solve again for welfare effects). 4. Let Country A’s import demand for beefbe DmA = 500 - [OF The rest of the world’s excess supply of beef is SxROW = 40P a. Under free trade, find the equilibrium world price and quantity. Then find the gains from trade for each region, and for the world as a whole. b. Now suppose Country A wants to maximize its gains from trade, by setting an import tariffon beef. Solve for the optimal tariff, T“. (Use a specific tariff). Also find the new world price PW, country A’s domestic price Pa, and the quantity traded. Next, calculate the gains from trade for each region, and for the world as a whole. 0. Suppose instead that Country A has an “infant govemment', whose goal is to maximize tariff revenues. Repeat problem b, using this new objective. ...
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This note was uploaded on 02/27/2012 for the course ARE 138 taught by Professor Staff during the Spring '08 term at UC Davis.

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Homework 2 - mwnwamhmm..mmn ‘ ARE 138 HOMEWORK 2 Winter...

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