How much of the short run aggregate supply

Assignment Help Business Economics

Reference no: EM13836454

Zamen is a small country located in the midst of the Atlantic Ocean. It is completely isolated: no one goes there, no one leaves. One half of Zamen’s working age population is unemployed. President Obama decides to give Zamen a billion dollars for the purpose of creating a labor intensive sweater manufacturing industry. It is agreed that Zamen will export 10 million sweaters a year to the US, which is 10 percent of the US market. Zamen’s production will always stay fixed at exactly 10 million sweaters. The sweater industry in the U.S. is perfectly competitive and exhibits constant costs.

a. What are the short run effects of Zamen’s sweater export on the individual behavior of US companies? In short run equilibrium, what is the change in US aggregate supply? How much of the short run aggregate supply is provided by Zamen?

b. What are the long run effects of Zamen’s sweater export on equilibrium price, firm output, the number of US firms in the sweater industry and on the final share of the US sweater market that is domestically supplied?

c. The Garment Workers Union decides to support a Republican candidate in the next presidential election. Why?

d. Zamen was hoping that the US sweater industry exhibited decreasing costs, rather than constant costs. Show why this would have benefited Zamen in the long run

Reference no: EM13836454

Questions Cloud

The profit-maximizing firm is operating : The profit-maximizing firm is operating in a perfectly competitive market where the market price is $100 and the marginal cost curve is determined by the equation MC = 20 + 10Q. What is the output for the firm?

Wealth is held as currency or checking accounts : If your wealth is held as currency or checking accounts, or other assets that you can convert to money on the short notice, your assets are considered to be?

Experiencing static electricity problems : A manufacturer of small plastic injection molded parts (caps, closures, fitments and pipettes) was experiencing static electricity problems during various steps in their molding and handling operations. The static caused the plastic parts to cling to..

Counterargument and ideas for rebuttal : counterargument and ideas for rebuttal

How much of the short run aggregate supply : Zamen is a small country located in the midst of the Atlantic Ocean. It is completely isolated: no one goes there, no one leaves. One half of Zamen’s working age population is unemployed. What are the short run effects of Zamen’s sweater export on th..

Calculate the dead weight loss and producer surplus : Assume that a monopolist has a demand curve given by P = 1500 - 4Q, and T C = 100 + 5Q2 with MC = 10Q. Calculate the dead weight loss. Calculate the producer surplus

The only sure things in life are death and taxes : As the saying goes, "the only sure things in life are death and taxes." This saying points out the result that everything having to do with taxes is an automatic fiscal policy.

What are the main causes of international financial crises : What are the main causes of international financial crises? How can they be resolved? How can they be prevented?

Determine exchange rates-why are exchange rates so volatile : What are the main factors that determine exchange rates? Why are exchange rates so volatile?

User Account

All Pages