Korea imports a large quantity of beef. With no beef trade, Korea's equilibrium price for beef was $8 million per kilo tonne and equilibrium quantity was 375 kilo tonne. If Korea opens its beef market to trade with no tariff, domestic demand would be 625 kilo tonne and domestic supply would be 125 kilo tonne at the world price of $4 million per kilo tonne. However, Korea currently imposes 40 per cent tariff rate on all imported beef. With 40 per cent tariff, Korea's domestic supply and domestic demand were 250 kilo tonne and 500 kilo tonne respectively in 2013. Assume that intercept of supply curve is $2 million and demand curve is $15 million per kilo tonne. (a) Analyse the effects of 40 per cent tariff rate on the price, domestic supply and demand, and beef imports in comparison with no tariff case. Provide numeric details. (b) Draw a graph and clearly show how the areas of gains and losses from the trade with 40 per cent tariff rate would change with brief explanation. Then, calculate the actual values of change in consumer surplus, producer surplus, tariff revenue and the amount of deadweight loss. Show your calculation. (c) Suppose that Korea does not impose tariff any more but instead imposes an import quota of 250 kilo tonne. Draw a graph and show how the areas of gains and losses from the import quota would change. Provide your explanation. Question 2 – 10 marks Part A: Answer the following questions. (a) Labour (workers per week Output (roses per week) Average product (roses per week) Marginal product (roses per week) 1 1,000 2 2,000 3 4,000 4 5,000 Terri runs a rose farm. The following table provides information on the number of workers and corresponding output. Complete the table for Terri's marginal product and average product of labour schedules. Briefly explain how you calculate and show your calculation. (b) ProPainters hires students at $250 a week to paint houses. It leases equipment at $500 a week. The table sets out its total product schedule. Calculate and construct ProPainters' cost schedules – that is, total cost (TC), average fixed cost (AFC), average variable cost (AVC), average total cost (ATC) and marginal cost (MC) per house painted. Briefly explain how you calculate each cost schedule and show your calculation. (3 marks) Labour (workers per week) Output (houses painted per week) TC (dollars) AFC (dollars per house) AVC (dollars per house) ATC (dollars per house) MC (dollars per house) 1 2 2 5 3 9 4 12 5 14 6 15 Part B: Answer the following questions. Price (dollars per smoodie) Market Quantity demanded (smoodies per hour) Each Firm's Output (smoodies per hour) Marginal cost (dollars per additional smoddie) Average variable cost (dollars per smoodie) Average Home

About

Services

Contact

Privacy Policy

Terms of Use