In the first quarter of 2012, the world price for raw sugar, 24¢ per pound, was about 70% of the U.S. price, 34¢ per pound, because of quotas and tariffs on sugar imports. As a consequence, American- made corn sweeteners can be profitably sold domestically. A decade ago, the U.S. Commerce Department estimated that the quotas and price support reduced American welfare by about $3 billion a year, so, each dollar of profit of a domestic manufacturer such as Archer Daniels Midland costs Americans about $10. Use graphs to show the effects of a quota on sugar in both the sugar and corn sweetener markets.
Answer to relevant QuestionsExplain why a change in the price of fertilizer causes a shift in the supply curve for avocados rather than a movement along the supply curve for avocados. According to Borjas (2003), immigration into the United States increased the labor supply of working men by 11.0% from 1980 to 2000 and reduced the wage of the average native U. S. worker by 3.2%. Draw a supply- and- demand ...How would the shape of the total supply curve in Q & A 17.1 change if the U.S. domestic supply curve hit the vertical axis at a price above p?A government is considering a quota and a tariff, both of which will reduce imports by the same amount. Why might the government prefer one of these policies to the other?Outsourcing of services by American firms has contributed significantly to wage growth in India. Explain why using a graph of the Indian labor market.
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