1. Consider a good that the U.S. imports, such as furniture. a. Suppose there is a...

 

 

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1. Consider a good that the U.S. imports, such as furniture. a. Suppose there is a fall in the world price of furniture. Show the effects of this development both in a PPC/CPC diagram (with furniture on the horizontal axis and everything else on the vertical axis) and in a supply and demand diagram with international trade. How will the fall in the world price affect U.S. furniture production, U.S. furniture consumption, and U.S. furniture imports? b. How will the fall in the world price of furniture affect consumer surplus, producer surplus, and total economic surplus in the U.S.? 2. Suppose there is a tariff on a good where the world price is below the level where the quantity demanded and the quantity supplied in the U.S. are equal, and where the tariff is not large enough to completely eliminate our imports of the good. How would ending the tariff affect the quantity of the good produced in the U.S., the quantity purchased in the U.S., and our good imports? 1. Consider a good that the U.S. imports, such as furniture. a. Suppose there is a fall in the world price of furniture. Show the effects of this development both in a PPC/CPC diagram (with furniture on the horizontal axis and everything else on the vertical axis) and in a supply and demand diagram with international trade. How will the fall in the world price affect U.S. furniture production, U.S. furniture consumption, and U.S. furniture imports? b. How will the fall in the world price of furniture affect consumer surplus, producer surplus, and total economic surplus in the U.S.? 2. Suppose there is a tariff on a good where the world price is below the level where the quantity demanded and the quantity supplied in the U.S. are equal, and where the tariff is not large enough to completely eliminate our imports of the good. How would ending the tariff affect the quantity of the good produced in the U.S., the quantity purchased in the U.S., and our good imports?

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Fall in World Price of Furniture a PPCCPC Diagram Horizontal AxisFurniture Qf Vertical AxisEverything Else Qo Before World price line intersects domes... View the full answer