Grantham ECN206 2023 January Week 8 Assignment Latest

ECN206 Macroeconomics

Week 8 Assignment  

Effects of Free Trade and Restrictions

Use the graph below to answer the following questions:

https://content.grantham.edu/academics/GU_ECN206/W8Assignment_files/image002.png

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?  _____