Currently the U.S. exports 525 million pounds of pork to China and sells them there for about $2.50 per pound. The average cost of producing a pound of pork in the Mid-West and shipping it to China is about $0.55.

a. Draw a graph to illustrate the profit-maximizing conditions of this situation assuming any market type you like.

b. What is the (a) total revenue, (b) total cost, and (c) profit under these conditions?

c. Since the Trump Administration imposed a 25% tariff on Chinese steel that is used to make farm equipment, the production cost go up by the same percentage as the tariff, what is the new cost per pound and profit?

d. Now, suppose China retaliates reciprocally with a 25% tariff on pork imports (U.S. pork exports to China), what are the most likely implications of such a policy in both China and the US? Do actual calculations.

e. Use your knowledge and understanding of economic principles to freely commenton this state of affairs if you are told that the price elasticity of demand for pork in China is 1.13, and the income elasticity of demand for pork in China is 1.18.

PLEASE HELP!

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Solution a To illustrate the profitmaximizing conditions we can use a graph showing the relationship between quantity of pork exported and profit Assu... View the full answer