(SOLVED)Effects of Free Trade and Restrictions

Discipline: Economics

Type of Paper: Question-Answer

Academic Level: Undergrad. (yrs 3-4)

Paper Format: APA

Pages: 1 Words: 275

Question

Effects of Free Trade and Restrictions

Use the graph below to answer the following questions:



The graph above shows the demand and supply of wrenches for the country of Spain.


1. If trade is avoided, Spain consumes _____ wrenches at a price of _____ per wrench.


2. With free trade, for a world price of $4 per wrench, Spain is producing _____wrenches.


3. With free trade, for a world price of $4 per wrench, Spain is consuming _______ wrenches.


4. With free trade, for a world price of $4 per wrench, Spain is importing _________wrenches.


5. If the world price is $4 per wrench, and the government of Spain imposes a tariff of $2, Spain produces ____________ and imports __________wrenches.

6. If the world price is $4 per wrench, and the government of Spain imposes a tariff of $2, how much tariff revenue will the Spain’s government collect?


Expert Solution Preview

1) Spain consumes 9 wrenches at a price of $7.5 per wrench.

2) 4 wrenches.

3) ......