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Chapter 32: Q.14 (page 730)

Take a look at Figure 32-3. What is the effect on foreign textile importers' total revenues of the imposition of the quota that generates a movement from point E1 to point E2?

Short Answer

Expert verified

The foreign textile importers' total revenues increases

Step by step solution

01

Given Information

According to the outline, the most extreme amount of import is 800large yards each year. The cost expanded to $1.50per yard. Without the limitation, it might have been 900 yards at the cost of$1.00 per yard.

02

Explanation

Without import standards, the all-out income created for the shippers would have been $900million.

In any case, with the limitations, as the stock is discounted, the cost has expanded. So presently the all-out income produced for the merchants is

$1.5×800million=$1200million

Hence, the foreign textile importers' total revenues increases

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Most popular questions from this chapter

Consider the table and answer the questions that follow.

a. What is the opportunity cost of producing modems in South Shore? Of producing flash memory drives in South Shore?

b. What is the opportunity cost of producing modems in Fast Isle? Of producing flash memory drives in East Isle?

c. Which nation has a comparative advantage in producing modems? Which nation has a comparative advantage in producing flash memory drives?

Why do you think that increased specialization in specific agricultural products has accompanied growth in African exports of those products?

To answer the questions below, consider the following table for the neighboring nations of Northland and West Coast. The table lists maximum feasible hourly rates of production of pastries if no sandwiches are produced and maximum feasible hourly rates of production of sandwiches if no pastries are produced. Assume that the opportunity costs of producing these goods are constant in both nations.

a. What is the opportunity cost of producing pastries in Northland? Of producing sandwiches in Northland?

b. What is the opportunity cost of producing pastrics in West Coast? Of producing sandwiches in West Coast?

Understand common arguments against free trade.

Suppose that the two nations in Problems 32-1and 32-2choose to specialize in producing the goods for which they have a comparative advantage. They agree to trade at a rate of exchange of 1pastry for 1 sandwich. At this rate of exchange, what are the maximum possible numbers of pastries and sandwiches that they could agree to trade?
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