The graph above shows the demand and supply of socks for the country of Banglade
ID: 1189404 • Letter: T
Question
The graph above shows the demand and supply of socks for the country of Bangladesh.
a. If trade is avoided, Bangladesh consumes _____ pairs of socks at a price of _____ per socks.
b. With free trade, for a world price of $4 per pair of socks, Bangladesh is producing _____pairs of socks.
c. With free trade, for a world price of $4 per pair of socks, Bangladesh is consuming _______ pairs of socks.
d. With free trade, for a world price of $4 per pair of socks, Bangladesh is importing _________pairs of socks.
e. If the world price is $4 per sock, and the government of Bangladesh imposes a tariff of $1, Bangladesh produces ____________ and imports __________pairs of socks.
f. If the world price is $4 per pair of socks, and the government of Bangladesh imposes a tariff of $1, how much tariff revenue will the Bangladesh government collect? _____ .
Use the graph below to answer the following questions Price $11.00 $7.50 $6.00 $4.0 0) 4 69 12 15 QuantityExplanation / Answer
a) If a trade is avoided, Bangladesh consumes 9 pairs of socks at a price of $7.50.
b) With free trade and a world price of $4 per pair, Bangladesh produces 4 pairs of socks.
c) Bangladesh consumes 15 pairs of socks at $4 per pair.
d) Bangladesh is importing 15-4 i.e. 11 pairs of socks from outside to fulfill the demand.
e) With the tariff, the total price of imported socks is now $5. Bangladesh now produces 5 pairs of socks and imports 9 pairs of socks.
f) The govt will collect a revenue of $9 for 9 pairs of imported socks.
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