Hi! Can you please help answer question 6 in the attached documents? This is for an international economics course.
Problem Set 5
Note: You may either work alone or collaborate with a single classmate when doing this homework.
Those who collaborate will receive the same grade as their collaborator. Each team of collaborators
should submit a single copy of its homework. Teams must be declared by filling in names below. No
adjustments in team membership will be recognized after a homework has been submitted. You are free
to use different partners across assignments, and you are free to work alone on some assignments and
to collaborate on others.
1st student name (please print) _________________________________________________
2nd student name (please print) _________________________________________________
You may hand this copy in electronically (via ?submit? under ?assignment? in classes v2) or by hard copy
before class on the due date.
For questions 1-4 below, explain whether the statement is true or false using AT MOST FOUR
SENTENCES. No credit will be given for answers that are not accompanied by explanations. Please also
include a CAREFULLY DRAWN AND LABELLED figure if you think it will help clarify your argument.
1. The ratio at which the Home?s comparative advantage and comparative disadvantage goods are
consumed does not change if Home imposes an import tariff on its comparative disadvantage good.
2. All else equal, the larger the difference between autarky and free trade consumption of a country?s
comparative disadvantage good, the larger the gains from trade.
3. Home imposes a tariff on its imports from Foreign. Foreign does not respond, i.e., Foreign does not
impose a tariff on imports from Home. The welfare loss for Home associated with this tariff is higher
if Home is a large open economy that is able to affect world prices than if Home is a small open
economy unable to affect world prices.
4. An import tariff which is high enough to restrict trade but low enough not to choke it off completely
will result in a production level for the export good in the country imposing the tariff that is (higher)
than production under autarky but (lower) than production under free trade.
B: The Real World
If you use the web to research any of your answers to questions 5-7, please be sure to cite your sources,
and to use quotation marks if appropriate.
5. In 2011, Oxfam produced a report (The Impact of Russia?s 2010 Grain Export Ban)1 analyzing Russia?s
2010 grain export ban. Please read the executive summary of on pages 1-4 of this report and explain
whether you agree or disagree with the claim that ?export bans exacerbate problems created by
interruptions in food production and may damage incentives to increase production at home long-
1 When you click the link, a pdf should start downloading.
term.? Please include a carefully drawn figure as part of your argument, and restrict your answer to
6. Consider the following information pertaining to a country?s imports, consumption and production
of t-shirts following the removal of MFA quotas. Note that for parts e and f you must make an
assumption about which entity collects the quota rents. Please note that assumption next to your
World Price ($/shirt)
Domestic Price ($/shirt)
Domestic Consumption (millions of shirts)
Domestic Production (millions of shirts)
a. Use the information in the table above to graph the effects of the quota removal on
domestic consumption and production. Include a companion graph for the ?trade market?
like that shown in class or in Figure 8-9 in FT.
b. The deadweight loss associated with the quota is ____.
c. The quota rents that were earned under the quota are ____.
d. The gain in consumer surplus associated with quota removal is ______.
e. The loss in producer surplus from the removal of the quota is ____.
f. The amount the country gained from removal of the quota is ____.
7. In 2009, U.S. President Barack Obama approved tariffs on U.S. tires imported from China. These
tariffs were requested by the United Steelworkers of America, the union which represents workers in
the tire industry. Please provide a potential explanation for why no U. S. tire companies (e.g.,
Goodyear, Michelin, Cooper and Bridgestone) joined forces with the Steelworkers in this request.
Please restrict your answer to <100 words.
8. Consider the following quotation from the May 10, 2013 edition of the Wall Street Journal:
The international body responsible for curbing trade in conflict-tainted diamonds is
recommending an embargo on diamond exports from the Central African Republic, according
to people familiar with the matter, a move that heaps further scrutiny on the country's new
rebel leaders amid growing condemnation of their rule.
Please explain how this policy will affect the Central African Republic using one of the models
discussed in the course. Please include a figure with your answer, and be sure to explain how this
policy might put pressure on the CAR?s new leaders.