PROBLEMS

1. The following questions refer to Side Bar: Key Provisions of the GATT.

   1. Question

      CM/Iq2f6+uUBTXBfAFTni/VlQem4CUj/d8yyA93iInxYQ9p5jW2UG2CkdviYEX2UoKQRoHHFW0WlsB1ZUBGRbee7+a26CbsyrJfK/5/lBOQcr+Bwc+TZ1/HYw5mdvgVsgIuxbE8JVgLJSDOlpuygd7KrWORKPc5UOn09a13W3OXSI3LNREF33Q5ZecxQDine5vtARRYZO6XvW03kWUSD6GhgKaYLMcv3Ft7yhNApBrqBSXKp9pYNokNKq6m7itmdlAdcXe/HRSaC5c/wYY+Ih+hXBZnE2FzipCAw5iPTn9HdngoXGNTIKXVVpW7qh4FWaLFuIlyJl3P7xh5d

      Prob 8 1a. If the United States applies a tariff to a particular product (e.g., steel) imported from one country, what is the implication for its steel tariffs applied to all other countries according to the “most favored nation” principle?

   2. Question

      kTDO1zPLvVuPj4s6z5RVbV6F5ACTwTb3/cMKGEqox+2y8WhjFVovTPd1naqlM3NTO8QcQVklMgG5xD9ZLUFmK2LxVtIVUI/6Kc4//9zfFKWzsoSsdwrdHlT5qhuzAMdXmYZ4oJwSgmQ=

      Prob 8 1b. Is Article XXIV an exception to most favored nation treatment? Explain why or why not.

   3. Question

      X9nNQwy8PsPHr5IJ+oVNhOVMZazBkbc2zv822VNa407jiXO3j4W3jho7b2uHvhkciz4/IAPOmglRk0PI0VNFwt43KC/7kMo2ip/ZP3cgC8N+jV4ZQDfJg42vcdmR54VxAC7a6sjgFCTCmnqnF6zEOU7de6Z3b0xczezdZ0Of/MAO/0PEZ2vXiu/zciTMR6rxsSfWwXtlcVDLw0zrRb23meW1SjSSPdwH8ef6mmjLfzMZ5hBf3wax7VXKJDDwccqItLAkoIEfLp0pV49k

      Prob 8 1c. Under the GATT articles, instead of a tariff, can a country impose a quota (quantitative restriction) on the number of goods imported? What has been one exception to this rule in practice?
2. Consider a small country applying a tariff t to imports of a good like that represented in Figure 8-5.

   1. Question

      shMVbPDCTEGUnRHii2VX5Di6iKl5IpBm7kYhG6RcbbLMS8GGK+Gt1q2TbKDut3IlXL8y77xaxYcQ5GZBoHzji3jFFwfVJSQQKvsu+F4X1Z8/9yoBqJ6Hgcslr+pH/qcbRj+DsJyX4m2z8UZpA0mrtrAliWTM7Gfg3XREeM6tjZ0mQJeuoZ5zQCdML3VgBpBiCyRhh47ngGwsqbPo5JYB3GSUw2ruylU2wdIHaj9yg5yjmgwry894K6SVuE9A/Ksx+psiiB/uubAlaiNYbs+Olxl90DDVxJKcb0Oo8/8iTsmyOCbnWsjAl+IGPZo5h/xxMGvc4xvP6GlBylwyRDZ3cL/BdOECAu91FhVtA7crm9Q7piXOrZg+DaZCfsI=

      Prob 8 2a. Suppose that the country decides to reduce its tariff to t′. Redraw the graphs for the Home and import markets and illustrate this change. What happens to the quantity and price of goods produced at Home? What happens to the quantity of imports?

   2. Question

      k5SuokfuvTrmi9+x5iQHVl1REgblM3VYTbCfmzMbR4GH9AlKPalWr6voV3npiyEQuR9PeyZQquxbdU0bUOc8l4f8yJDzZ8T/QbBWiWiea0N0Kk7Tkuu7UCbj+vfJ0rn8KVZO5cruXheqlCeYAj3CMbFdIglSbq+ZrsL6eDtV74cNz61WIN/rzz8gAFyAg52ZVI0Mptr84LxKgHNd38kjZpbQoILuZ6OOFmBdV+cVaV1VbUFBPvSNdqMCToY2QTnmQOL/Te4y2NVtcC6pcye28x5Ac5oSr/uw4JHM2BCFpH1EzXngi6cV03R5TvNrb4NqWayRLRxOwW/0Nbk9gQVCqsvLsq0g1qQS4BO+lmWAVO2shVImgnGMpA==

      Prob 8 2b. Are there gains or losses to domestic consumer surplus due to the reduction in tariff? Are there gains or losses to domestic producer surplus due to the reduction in tariff? How is government revenue affected by the policy change? Illustrate these on your graphs.

   3. Question

      bcPq5rdIMzyjxQ/PZ/X1MJsSk21s0LPEiDkWHvt4HHyny+f+uhlTfcfB6KLPM/BKZ3dsH9XSP3axPGDbRrkMjVSvT/TwXhtatd/bRbxTVJJShCMeO/CDFg==

      Prob 8 2c. What is the overall gain or loss in welfare due to the policy change?
3. Consider a large country applying a tariff t to imports of a good like that represented in Figure 8-9.

   1. Question

      eUMz5+pU1/bggw2oGM5fe7wUlCHAJWw4Id0/q66JBV+sdhFxQi76A0mrBk4U2OHXUYudRiwoEmLWi9WwaKInmgXnoVmdrl3Kvj5+hlD5wrocvZwyYsA+BUvaJuwtTPajSfj2fFbfntpI5cc4kLqSDMMeJEwaSKiIPVX1sIfaNesGK9ud/tG+1c9xVAs=

      Prob 8 3a. How does the export supply curve in panel (b) compare with that in the small-country case? Explain why these are different.

   2. Question

      0SEMck50nUsZ1FvzB5iOuf+fVYf6sjIh92AB8sfA+djzFT4A8R4hiYV5xxRxvtWt/XIwZ5DINMY9+80WHrf13xJEppm5sCilJdPiF7WLBo5+I7ubNiozz+ikouggnLC6K5H2PkgiZ0txmH7xwZ+72lB2i3ntjnd9tV7cfGFeSqeadRFsJk5CUue3lQn4sXMYpcFG0DSuSgvo4iT8YzfdJkGM5YhB/+ctxhRUpy2QkBkROoFeEP9sdwo8iXopp+pp1SkEdE1OKv+df11afXplxNrqQJpBCUB/0Fw8miYwolbmwB8OqsOKBeOO9ziHx8Wp/tHan1vFpwz1+FUEdv+bslzStBb3mEYtOt4eZd+YANkj9jpKm1ueGL+sYIdQGDqIy9j0+cdvP2/9uq8uClo9kzNnYMja3rqXuEHoSzQgaYyZ/SI7qOLx8GihUuxXIjwcRU5e/Q==

      Prob 8 3b. Explain how the tariff affects the price paid by consumers in the importing country and the price received by producers in the exporting country. Use graphs to illustrate how the prices are affected if (i) the export supply curve is very elastic (flat) or (ii) the export supply curve is inelastic (steep).

4. Question

   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

   Prob 8 4. Consider a large country applying a tariff t to imports of a good like that represented in Figure 8-9. How does the size of the terms-of-trade gain compare with the size of the deadweight loss when (i) the tariff is very small and (ii) the tariff is very large? Use graphs to illustrate your answer.

5. 1. Question

      1V3zVVXgqycRy3a1dZ/WfCVTQ8Fhn1EpY88QTXbhX6Gm6/NWrJjnrCJWHJJxCDjsYnwqRxTLEuPdp/AvUmoHFxstSVa4SgckyZp+9ElOIt2IIvsrK5tYn3mgqbjxxuAQ7yhmPqi7MJZQl+ptwUizbrs+4S6bQgas/ZEpqXScUC9WKtJbs1WtEIEIoaObHFm1

      Prob 8 5a. If the foreign export supply is perfectly elastic, what is the optimal tariff Home should apply to increase welfare? Explain.

   2. Question

      n1kHzkc5NmD7vTQtrwA27FNRISfA0oSnb4Hq6nQJ1pfOf2c+TLhc9y37it2DpRUNCgQeKlu3FxQ9cQZw8qFLl6ddP1u7zOwxKxt/KRwI1AubLUDZSZdNA8HF1Ijg2HjPwjiR2rLHHaTXx6uepxK8UJu8hilWJIHjTW/+gF+XoN0W/E7jmMQe6oVY5mz3RhowngUIAsfExIlhAJb9reEh3g==

      Prob 8 5b. If the foreign export supply is less than perfectly elastic, what is the formula for the optimal tariff Home should apply to increase welfare?

   3. Question

      AcSyUwdQgH39y8URd7dGKgqFnBoq7uMs9aLyuqsWbWYkk91Qh3dtY6APhqUdcT5/CBSHG/Rkjifj04kG3rLqtZGmL2MeosIFIvDw2taz+jvS2FjAxfK370S+J5oNPEVFz2rdag==

      Prob 8 5c. What happens to Home welfare if it applies a tariff higher than the optimal tariff?
6. Rank the following in ascending order of Home welfare and justify your answers. If two items are equivalent, indicate this accordingly.

   1. Question

      3UmlbJehVfLxLglU+EK8P9sXHoEF1XglXcAYN4PHfgB/XpKfwE0NzV0hyTCwlUaFVmAndyL0b4zFvmW1VdehTT4FgZANXf4lUFA5G7vjP/zsBvireUTkZXBUMcwIY6A/YqVKw849ASvslFKS

      Prob 8 6a. Tariff of t in a small country corresponding to the quantity of imports M

   2. Question

      mhnzCeSjxCoDv3plzI4lHzNhXO1poy/BcCCmUULCPkgt+HWsb9cDh1npieuhHB+MOZzmALfIbtP4uInBgoMHOgVTNB3cEvrtWop7yczsilwz/4nWc6EQODsM2ydAE5zDS7qJ/1HV6kGqU15KzEMT2w==

      Prob 8 6b. Tariff of t in a large country corresponding to the same quantity of imports M

   3. Question

      aWHoBDd2VNb3I4i6/zV7e/BJehLWYB+SgLJnMNRNdWtDC71w5J635IgeZUuF0xUgK3919LsHZG9D/uVhwmT72hBYx71vtPTmpkY/8x9s7ISJIKlhFdx78F/spf7JYyEzHF+Kk8Ykuir7cH+2z2aDg0lW/ZoVDuM3+B8+HO07WV6Hc8c/

      Prob 8 6c. Tariff of t′ in a large country corresponding to the quantity of imports M′ > M
7. Rank the following in ascending order of Home welfare and justify your answers. If two items are equivalent, indicate this accordingly.

   1. Question

      3UmlbJehVfLxLglU+EK8P9sXHoEF1XglXcAYN4PHfgB/XpKfwE0NzV0hyTCwlUaFVmAndyL0b4zFvmW1VdehTT4FgZANXf4lUFA5G7vjP/zsBvireUTkZXBUMcwIY6A/YqVKw849ASvslFKS

      Prob 8 7a. Tariff of t in a small country corresponding to the quantity of imports M

   2. Question

      h/MGDXveef9YVrXxOxgLzlHWW04go7iC9nQER6Gk9zWG2VGa3fF8uVe0Z5I7YzUmXJ+tgYpYjs4GfwsWp/K8Ox0d8TqguiAXleHlZb1u6knMsAgQXI/+Oagq6jsFIFba8SpJNBLu7RZoDh1NsmuiMfFYUYMkABMe/xtaK+PXdE5bbi+TXrDMRJP8xc4=

      Prob 8 7b. Quota with the same imports M in a small country, with quota licenses distributed to Home firms and no rent seeking

   3. Question

      7XTUL//NXLHo9q7AFM5L4vup2IKO9ENGAgxH0mwo+ksyQCSjOfq4y6LAHk6E3vUvvYOxWruRa80MhbDuSELMpi6wGUIxDh/cJFDkx2FVRv4Bo5TybyZOc5TFA+hrPv1F6nmNqw==

      Prob 8 7c. Quota of M in a small country with quota licenses auctioned to Home firms

   4. Question

      YfkdqMphICeZoIsVo7q3ILhgx7hYh8PIQ2B5L3+d0/FFhc5/LQ3h6lHgcfYfVO1DLrB4khLL0iQWPynXmidy8kQtwUADMWVjKlSDoKFPdNTPYDvxRbeCcnJu/1kZb+37PMdHLg==

      Prob 8 7d. Quota of M in a small country with the quota given to the exporting firms

   5. Question

      fwVD1pjdPUnC/3xn/RhYkHpSd21cHle7jiiE0Mnnyw21z8sSJPfljOCppklOMjWauObSwGdQ+0Ope34v72kQgWs8V0dy/AoCReHlnwTRFxacSXR/TR2xBnYXUYACqJKCstf6xJ45RrU9/+MWDJ+rn5nGUAY=

      Prob 8 7d. Quota of M in a small country with quota licenses distributed to rent-seeking Home firms

8. Question

   P1RGLsL+crQbfYXdnaZDu8hVSXBJ7EE/lshLSDO67+F4EbkuEK3AinPjwUxFvVYUv/q9kcSsT+5VZEAhanD7KWTv5QWN3hW3rgwkA1LKSmg8+GnsGiFq/3Y8bmMA7Yku+i7nXjCucbYm02k6s5ViOQ==

   Prob 8 8. Why did President George W. Bush suspend the U.S. tariffs on steel 17 months ahead of schedule?

9. Question

   dv+XbP6O8Q6JthqsxV7Jcexv+QFyKF3Vr2DMUv8rdXgCVGrTGxoX45+pCzjj4bMaABCusx7BtfIEm0H1FFcEZ+6DeMXRVQSuZH5PzzGltI1QtxPYlgNdSqND2jEDsdcFqEI4xT/xFv7MHzJROvTcloiolkSbYRL/bwjoy+7oimcMvoM+tncPaeF1k6UBDfuObZuolsh55cGuoa68B3WjZWiCDO16mhXOODIxh7EXXUGG7cyyw6V4EgozNz8p9Z44TjDHDFkPfgZ6FIvOTLKwO89CHJ8=

   Prob 8 9. What provision of U.S. trade law was used by President Barack Obama to apply a tariff on tires imported from China? Does this provision make it easier or harder to apply a tariff than Section 201?

10. Question

    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

    Prob 8 10. No U.S. tire producers joined in the request for the tariff on tires in 2009. Rather, the petition for a tariff on tires imported from China was brought by the United Steelworkers of America, the union who represents workers in the tire industry. Why did major tire manufacturers operating in the United States, such as Goodyear, Michelin, Cooper, and Bridgestone, not support the tariff?
11. Suppose Home is a small country. Use the graphs below to answer the questions.
    

    1. Question

       TwTEGk7mxZffSEy1xhdYJ5pw8HTMxVARkD0y8+0lG1kYHLz/NWYCpJXFaDWkUGLG+0kAffAMn1N6/ufvVXMhivFxd8SUWkPYB/8lgf2IqL5YAf09vxXbijgEe2lVnUfE

       Prob 8 11a. Calculate Home consumer surplus and producer surplus in the absence of trade.

    2. Question

       7fTJpN+V7RJotD8Foun3lVXLvTLyOboKmWtrAgwFCAr9ZE7dLGKlSd10fT7vFaZnyvRNlaUpRHU1NKFPc9UOJv2UTSTFXnkFfC9wzrcNmMtgYq7QAhGT/VW0EcL1LH1iJNILRYe8WW8dJcoZd4Buf6z1vGdG0vbWc9Wpbr2zKYo3GrDQre+FpIQPHLmoGK7vgghmNsg4PvOahuBjAGAwrYH0/l4mBPsWRuW8xTyYzgPdkdEGDYKrwfD8+vvsfBw52Ju266+iJhFoxEXPXnTMaCThyT0=

       Prob 8 11b. Now suppose that Home engages in trade and faces the world price, P^* = $6. Determine the consumer and producer surplus under free trade. Does Home benefit from trade? Explain.

    3. Question

       wOOXxI+Qh5Z3+WtfcM9GgH+ftffIULQEMungInETq7Fklq6g37wj3fWRSAX0mmX3lI+Tu3qIt3e+M94954s20GasG/DAk9PP9bjDUChSTZl/57ahIU7lVgJvTRHMk8rrBaHLkhKMg0q+Tud4I8c93UINmes28wsH0Pn9LH0EmyAo3gjXOxmi6xYoV6+rZeT2E4YVaG324x8X3Da+4BloyfEXsz9hsVqqaOiK0AFxL2cZoQ6Q3BM6zIOGdLHZB7rmszny9Uy9eZrUFal5j77NgdgTR5E=

       Prob 8 11c. Concerned about the welfare of the local producers, the Home government imposes a tariff in the amount of $2 (i.e., t = $2). Determine the net effect of the tariff on the Home economy.
12. Refer to the graphs in Problem 11. Suppose that instead of a tariff, Home applies an import quota limiting the amount Foreign can sell to 2 units.

    1. Question

       jL5HOWZqTj4fFn+j6p46L/+cmkP26qcQ9NoxLUVEXn1KdB+bjMEHS+UiLJAasZyfOjbMoJ3uemFxEN3jAhKINnDKrVkSebZTI69wzI9fSW11rOWL/PM0vIyGtWOrDMHou0dqAm2Ogc12MEygiU8pBRMMCHtU5YGmZVcnRJ2kXajELr5/5YxMmA==

       Prob 8 12a. Determine the net effect of the import quota on the Home economy if the quota licenses are allocated to local producers.

    2. Question

       JZlIK5kaa7sVocedaxbgUfOsCwQGyFeDnoSY8Rp8lZwSOwllbIfpkDk4SsUQOsDMSOlnlQH2G3AjBDd+2MjIK44+eypUp1DTXnxVBw8A605fLL6BjMqbXx2GZeqg68OjwQ6WpqYu+WGPspYNSRJrPiKlBcfPi2PPyaPZqXYzaXQ=

       Prob 8 12b. Calculate the net effect of the import quota on Home welfare if the quota rents are earned by Foreign exporters.

    3. Question

       CEHm4ZEfErPBbnakioXPC8YQ5vXGriR+TOHXiWRMo7tpW1ZTjV+ryVnkVmKpDv0g6lZVhqRS0GJhhrbuLGY6OxTDXCDwEyuKkp+g2eUDnWfkZrj3Xe0/1xPAYoKIt0Uh

       Prob 8 12c. How do your answers to parts (a) and (b) compare with part (c) of Problem 11?
13. Consider a small country applying a tariff t as in Figure 8-5. Instead of a tariff on all units imported, however, we will suppose that the tariff applies only to imports in excess of some quota amount M′ (which is less than the total imports). This is called a “tariff-rate quota” (TRQ) and is commonly used on agricultural goods.

    1. Question

       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

       Prob 8 13a. Redraw Figure 8-5, introducing the quota amount M′. Remember that the tariff applies only to imports in excess of this amount. With this in mind, what is the rectangle of tariff revenue collected? What is the rectangle of quota rents? Explain briefly what quota rents mean in this scenario.

    2. Question

       o6H1TfMqJKnyEsiRUvMNJBhp6AziNT5Sz9caUO9g5j/Hfcq4c0ESGcS+7P9jw8jIDnepPFbqrEAI4GO9rNOUy2SowUW2T/cD9PKbjZx5htTAH3Ws1oStD382KDR0zlKxMCzD6Pbyl7ipZIC7BvgpoA/8UOnc010vJKxjg0alTu1CfdJpuq05f0+1Offuo1G1TST5LSafYH8w2vLz3iGHF968+XtWjYcJOV5EaTVVCiIYc3a5cEE/wfQesBS/vouGFfTZez3LCkU67CY3N50KPjfa2XMJo2OeT+H54SUBT6Ul2KfPErhTpA==

       Prob 8 13b. How does the use of a TRQ rather than a tariff at the same rate affect Home welfare? How does the TRQ, as compared with a tariff at the same rate, affect Foreign welfare? Does it depend on who gets the quota rents?

    3. Question

       jvp3NolFWEw7Fesj0yAW0dfxRUifqNpn6O0eQlKL/nFZ9kkWs7bHX/KuAxxvUaro5+huwWLciOzXAPNJBwsEDr9MJRpa0Sh65nmyacvOd3DB4xzdx5vVzw==

       Prob 8 13c. Based on your answer to (b), why do you think TRQs are used quite often?
14. Consider the following hypothetical information pertaining to a country’s imports, consumption, and production of T-shirts following the removal of the MFA quota:
    

    1. Question

       ammQx7ZI6rcNPepfQQ6vTSMncu9uhmyNrDSK1ww2B+moGXEIcP5db6S31zYIxHA9hPez1DwDkuiDyNWC7FIOzmnRWAnxenGLbuFG1QejuijBUAjzuK/H7FOUcurTWjAO

       Prob 8 14a. Graph the effects of the quota removal on domestic consumption and production.

    2. Question

       V07nWtgseg9WVEQIG4l253d/XD3/Q+RKMYSAaj5r7F/LNd6zrRVvWlWuPxGsEupDw7HT1jt0yfBNMG813gm79i1PKW2oU+ZxA48fNHmDHF0pekejalxwAg==

       Prob 8 14b. Determine the gain in consumer surplus from the removal of the quota.

    3. Question

       o5g8a5UHgRQ8XjGEZH2DmWVlMiLlE4P6xzgz3e02RHY1RGvvrkqvQ+xa+GDFFRlq4zB2hWMMHgcSsHBAL6EJ9EwXwVzI9izr19VfcqWXLEUzig8Rh45kQw==

       Prob 8 14c. Determine the loss in producer surplus from the removal of the quota.

    4. Question

       ED4wVHcYf3boG5D0iQ/VzL8AZvVYubjW6I9XeHMzalyqdVmRv+6HTR419fbEgfVRtOH7OflVxhEElZHhlSSj8GBAiXB4FpLLeC0bvQ==

       Prob 8 14d. Calculate the quota rents that were earned under the quota.

    5. Question

       EiF8stFxT1QkvfAalojzGH60JfffeXl0dmtYMJHhfRFsMgcMX0n7XPijAg1IqwEWZBSYq2R1YG/e00tI6+3CcegFNTclFKyRQf+wjNMi7BZ2wvkh

       Prob 8 14e. Determine how much the country has gained from removal of the quota.
15. Suppose that a producer in China is constrained by the MFA to sell a certain number of shirts, regardless of the type of shirt. For a T-shirt selling for $2.00 under free trade, the MFA quota leads to an increase in price to $2.50. For a dress shirt selling for $10.00, the MFA will also lead to an increase in price.
    

    1. Question

       XKvYaPZ0RhV6bwis35ULG/xGKanA4bGY9NBs66f8z8CJciEo49auScAGmr7yIcvdOrgoGvD2NlJSLQOBQ51/0Zx3kKATCPp6Up6HxrJBACUfqtSFqEA9aLOCZ0Sdq5GJ3rqf1Var9fwkzSX8TSC41xAr8mYrej0dp6Eu1Qp1/y6/5KOVAmstZP6HT6YpgMhIvGzZp4ms9md+dgQpH6WnmtBFEQAuq6el0lmYLkp8zcW02esv2QEdqDRh8dzMGmpTRp/BzlOTMBFznlxZa3pL+Piy9vFIp/gYUzzvyx1joYrswvn/fMJpYhIrQYh+ARuYSx1bxQxcTK3hH2iZJ75ngRugaYqL3WsoB9vXycoZ0j07HSe9pDS/IQ==

       Prob 8 15a. Suppose that the MFA leads to an increase in the price of dress shirts from $10 to $11. Will the producer be willing to export both T-shirts and dress shirts? (Remember that only a fixed number of shirts can be exported, but of any type.) Explain why or why not.

    2. Question

       SbmCMZ0thVrH7TMIr/r+PjFVcv0uxUyMH6MauqE9h2eZwuKXLr+/g2lvXM1LWVQ7n9GSSd2jhL9qfFgkHWRBqTvU7k1/1xMqJYjY4+okOjA1yV87k2Z7gsf5qFWhvBEH4mOy9heFANSSJu6LgWkJbaLzFngGZ4OKxWMudZZshMyCdLnHz+gyLEapyUocda5LNY5Q2QZYVyg=

       Prob 8 15b. For the producer to be willing to sell both T-shirts and dress shirts, what must be the price of dress shirts under the MFA?

    3. Question

       4+zTqNJyvKfqR7DOGmiLyLIAEp0cBLdWzc7dAMO9GwZ0AyI8KRo3LqT9rwwPsVs3SOuUuCUuHP+6FJL5Kk/B8g8rQlcgcC0RxhSm2F6ouxA3Ss5HlIdeptT1/53iC70VQYAgzEEYHz3fXw5ANiLativ0Da/lBuWUx+5JIBb+ILF+SmvW7wlGZjCULBl3gy0yo9ID2jwRvwbkzG7PICyhOmyX/6Ugp3euJZVRfqjafunMijRjHcHPK1bXKas1DlZkC+/hc8n5VRM=

       Prob 8 15c. Based on your answer to part (b), calculate the price of dress shirts relative to T-shirts before and after the MFA. What has happened to the relative price due to the MFA?

    4. Question

       bUnwxUUJ+RXvfOdtH5dtCKMUtwryzv90MIcCQem6vM2s/Lj0QorLJoAU0jRGxhC6Wa8vJfm7rBgLVmDLbeRAUsfpug9fR5USAPr9FdmbUFM5YFBPxSpZJ9vBQdlxnEAN4P04DfGphSptt1sG0K9zBq8O8RT7lcixwzAfqiwikp+FaO6KdCv70ZtebNg69mMmBLwosUH2UwBdlyKIsBhbVuV/mMHlgPtiWldxVb8cPDclSTOv

       Prob 8 15d. Based on your answer to part (c), what will happen to the relative demand in the United States for dress shirts versus T-shirts from this producer due to the MFA?

    5. Question

       aW+9xy4w3Ehq5FzScn6Lq/FK0eRCazfv7+ct1XCVrNuRCjbXlHBcjaiQjOhm/kgvTcQhU4TfEvK5p3U5K1q4zsMAq7aiI08vBJs7lUeN27UAY4hcn6AilXgsxn3CgrjvxNNs7hhSdzS3UjttqlM76nuG2NTV/SUKmrZ1u2zk5anp4hEV7Gn5USgGjUatCa20jel5aCkaLEEB6XTqdVtSKb98yt0=

       Prob 8 15e. Thinking now of the total export bundle of this producer, does the MFA lead to quality upgrading or downgrading? How about the removal of the MFA?