Question: Chinese art factories are flooding the world s generic art market
Chinese art factories are flooding the world’s generic art market (Keith Bradsher, “Own Original Chinese Copies of Real Western Art!” New York Times, July 15, 2005). The value of bulk shipments of Chinese paintings to the United States nearly tripled from slightly over $ 10 million in 1996 to $ 30.5 million in 2004 (and early 2005 sales were up 50% from the corresponding period in 2004). A typical artist earns less than $ 200 a month, plus modest room and board, or $ 360 a month without food and housing. Using a step-like supply function (similar to the one in the “Upward-Sloping Long-Run Supply Curve for Cotton” Mini-Case), show how the entry of the Chinese affects the world supply curve and how this change affects the equilibrium (including who produces art). Explain.
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