Determine venezuelas consumer surplus and producer surplus

Assignment Help Microeconomics
Reference no: EM13736487

Table illustrates the demand and supply schedules for television sets in Venezuela, a "small" nation that is unable to affect world prices. On graph paper, sketch Venezuela's demand and supply schedules of television sets.

a. Suppose Venezuela imports TV sets at a price of $150 each. Under free trade, how many sets does Venezuela produce, consume, and import? Determine Venezuela's consumer surplus and producer surplus.

b. Assume that Venezuela imposes a quota that limits imports to 300 TV sets. Determine the quota-induced price increase and the resulting decrease in consumer surplus. Calculate the quota's redistributive, consumption, protective, and revenue effects. Assuming that Venezuelan import companies organize as buyers and bargain favorably with competitive foreign exporters, what is the overall welfare loss to Venezuela as a result of the quota? Suppose that foreign exporters organize as a monopoly seller. What is the overall welfare loss to Venezuela as a result of the quota?

c. Suppose that, instead of a quota, Venezuela grants its import-competing producers a subsidy of $100 per TV set. In your diagram, draw the subsidy-adjusted supply schedule for Venezuelan producers. Does the subsidy result in a rise in the price of TV sets above the free-trade level? Determine Venezuela's production, consumption, and imports of TV sets under the subsidy. What is the total cost of the subsidy to the Venezuelan government? Of this amount, how much is transferred to Venezuelan producers in the form of a producer surplus, and how much is absorbed by higher production costs due to inefficient domestic production? Determine the overall welfare loss to Venezuela under the subsidy.

1664_Demand and supply schedules.png

Reference no: EM13736487

Questions Cloud

Importance of the employee performance appraisal : Write a 500-word essay on the importance of the employee performance appraisal. Support your position by citing the text and/or other researched sources. Be sure to identify all sources.
Concepts and the impact of failure : A discussion of who is affected by each of these concepts and the impact of failure to provide a healthy, safe and secure work environment.
New strategies for attracting new employees : The new CEO of your company, who just came from a competitor, has just asked you to discuss the organization's compensation system. As the compensation manager, you tell him about the organization's nearly 500 employees in about 70 different job t..
The chief disadvantages of companies agreements : I know from my own personal experiences as a business owner and consultant that NAFTA significantly raised the tax responsibilities of companies engaged in cross-border business transactions. For example, I had to pay Mexican federal taxes on all ..
Determine venezuelas consumer surplus and producer surplus : Suppose Venezuela imports TV sets at a price of $150 each. Under free trade, how many sets does Venezuela produce, consume, and import? Determine Venezuela's consumer surplus and producer surplus.
What were the causes of the american revolution : What were the causes of the American Revolution? Why did tensions between Great Britain and their North American colonies escalate so quickly in the wake of the French & Indian War?
Explanation of the target market-why did you select : Define a business idea, preferably one that you create, that might work as a start-up firm in the United States. Your proposed firm should provide a particular product or service mainly to customers located outside the United States.
Develop your pricing and promotional strategy : Develop your distribution strategy for the product. What retail outlets will sell your new product? How will you manage your supply chain? Develop your pricing and promotional strategy. How will it focus on your target market
Practice of human resource management : Discuss two major trends that are currently affecting the practice of human resource management. Provide examples of how a company's HRM practices might be affected by each trend.

Reviews

Write a Review

 

Microeconomics Questions & Answers

  What will happen to the equilibrium price of wooden toothpic

Assume the market for wooden toothpicks is competitive. Earlier this week, in a nationally published study, 4 out of 5 dentists enthusiastically endorsed the benefits of toothpicking for dental health

  Determine the worth of annual deposits

Determine the present worth of 5 annual deposits of $1,200 at the end of years 1 through 5, followed by 4 equal annual withdrawals of $700 at the end of years 4 through 7. Note that both years 4 and 7 will have a depsoit and a withdrawal. Interest..

  I employer resposible for the damages in this case if so

an employer gives out private information to an employees ex-husband. the private information included the employees

  Explain events using the aggregate demand/supply model

In 2007 the U.S. was faced with two events. At the beginning of 2007, oil prices more than doubled. A financial crisis hit the economy starting in August 2007 causing a reduction in consumer and business spending. These events led to a rise in th..

  Construct a trigger strategy

What is the Cournot Solution in a market of 2 firms with zero costs when P=200-10Q. Construct a “trigger” strategy that can support the collusive outcome;

  1 the demand function for a cola-type soft drink in general

1. the demand function for a cola-type soft drink in general is q 20 - 2p where q stands for quantity and p stands for

  1question why does a business need to understand

1.question why does a business need to understand elasticity of demand?2. the schedule below is for beer pricequantity

  Requirements for ratification to be effective

Which of the following is true of the requirements for ratification to be effective? When an agent commits a crime:  Constructive notice:

  Being coerced into an alternative dispute resolution forum?

Which of the following is an issue with consumers being forced to give up their right to a trial and being coerced into an alternative dispute resolution forum?

  Products had an exercise tax placed on them

If the following products had an exercise tax placed on them, who (buyers or sellers) would pay the tax and why? Explain the economics concepts involved.

  Discuss the typical risks faced by a firm

In a market economy, the price system facilitates allocation of resources. Discuss how a manager may contribute to the profit maximization goal of a firm by studying managerial economics.

  Physicians offices supply some urgent care services

Physician’s offices supply some urgent care services (i.e., services patients seek for prompt attention but not for preservation of life or limb). Name three other providers of urgent care services. Emergency departments, urgent care clinics, and wal..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd