N16-MGEA02H3.final exam 2015. Version A |(Compatibility Model - Word Layout Refe
ID: 1116786 • Letter: N
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N16-MGEA02H3.final exam 2015. Version A |(Compatibility Model - Word Layout References Mailings Review View Tell me what you want to do el AaBbCel AaBbCt AaBbcet AaB Aa Sub Paragraph B) S1.00 C)S1.30 D).33 )S1.44 Styles A) So F)S1.50 G)S1.53 H) S1.60 DS1.80 J $2.00 35-37. The market for widgets has the following supply and demand curves: Supply: P-10 (1/3)Q Demand: P 100-(1/2)0 Initially, the market is in equilibrium at P6,Q08. Questions 35 through 37 concem this market. 35. Suppose the government opens the border to free trade in widgets and foreign suppliers have a perfectly elastic supply at a price of S$40 per unit. As a result the dollar value of widget imports is: A) SO F) S1200 G) S5520 H) $4140 I S2400 J)none of the above B) $40 C) S3600 D) $4800 E)$1380 36. As a result of trade (rounded to the nearest dollar) the gain to society has changed by A) -S684 B) +S684 C)-S594 D)+594 E)-$90 F)+S G)-$1278 H)+S1278 I) so J) None of the above 37. Suppose a new study comes out that identifies widgets as a source of a health hazard, exposure to them causes cancer. The study estimates that the total global external cost of widget production and consumption is given by the following expression: Now determine (rounded to the nearest dollar) the total gain to society (not the change in gain io society) after free trade: A) S1350 B) S3600 C)$2400 D)S2500 E2550 FS6000 G) $7350H) S4950 D$4860 J None of the above ed States)Explanation / Answer
35. After the free tarde is open, the dollar value of widget import = World price = $40.The correct option Is (B)
36. Gain to society = TSafter trade – TS before trade.
TS = CS +PS
CS = ½(100-46)*108 = 2916
PS = ½*(46-10)*108 = 1944
TS before trade = 2916+1944 = 4860
After tax
CS = ½*(100-40)*120 = 3600
PS = ½*(40-10)*90 = 1350
TS after trade = 1350+3600 = 4950
Gain = 4950-4860 = $90
Option (F) is correct
37. TEC = 1/6Q^2
TEC = 1/6*(120)^2
TEC = 2400
TS = 4950-2400
TS = 2550
Thus the correct option is (E)
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