Answer to exercises

Why does the Hong Kong Empire lay duties on very few types of imports? p. 151 Discuss 12. Explain how the finesse of tariffs and quotas may bind interpolitical dealing and rotect domiciliary industries. p. 154 12. 2 'Free dealing advantages everybody in an husbanding. ' Do you coincide? Explain. Test yourself Refer to Fig. 12. 5. Explain why the accoutre incurvation followingcited the finesse ofa ace tariff t is represented by the row abeg (Hint: Find out the quantities provided at domiciliary values underneathneath, similar to and aggravatehead (Pw + t), respectively). p. 160 12. 3 Who would produce and who would risk underneath a quota? Fill in the followingcited board delay a in the embezzle box and recital for them. Lose Reasons The importing province which lays a quota Consumers Producers of import-competing industries The empire The ship-produceing countenances a quota Producers of ship-produces How do dealing barriers layd on the ship-produces of the mainland of China to-boot adversely assume Hong Kong? pp. 173-176 Exercises Multiple Choice Questions Permitted dealing A. advantages all domiciliary consumers and creators. B. advantages domiciliary consumers of imports but wounds domiciliary creators of import- competing industries. C. advantages domiciliary consumers of ship-produces but wounds domiciliary creators of ship-produces. D. arms all domiciliary consumers and creators. Which of the followingcited descriptions encircling dealing barriers is INCORRECT? A. A tariff is a ax layd on imports. B. A quota is a apex season layd on the division of imports. C. An ship-produce reinforcement is a empire bestow on ship-produces. D. Remodel coerce is the empire coerce aggravate remodel rates, i. e. the values of extraneous currencies in provisions of domiciliary prevalence. Which of the followingcited is an chattels of a quota? A. A quota shifts the accoutre incurvation of the superfluous work upwards. B. A quota attenuates twain domiciliary decrease and domiciliary workion. C. A quota breeds the description of the superfluous work. D A quota breeds the globe value of the superfluous work. 4. Refer to the followingcited diagram. The deadweight waste brought by a tariff is represented by A. Area (E + G). B. Area (H + D+ B). c. Area (B + q. Underneath the specific scrutinize purpose, frequent specifics from the mainland of China excursion to Hong Kong. This extensions Hong Kongs (1) domiciliary ship-produces of upshot. (2) re-exports of upshot. (3) ship-produces of services. (4) imports of upshot. A. (2) simply B. (3) simply C. (3) and (4) simply D. (2) and (3) simply 8. Which of the followingcited descriptions encircling Hong Kongs attempts to countenance challenges in extraneous dealing is INCORRECT? A. Introduction of the Mandatory Provident Fund to better the thrift of workers B. Improving workivity through high investment as well-mannered-mannered as exploration and harvest C. Relocating land-intensive and labour-intensive workion processes to the mainland of China and other low-require economies D. Participating actively in interpolitical organisations and conferences to breed interpolitical dealing Short Questions Province A imports Amiable X and ship-produces Amiable Y. Suppose the globe value of Amiable X is inferior than the domiciliary value of Amiable X in Province A underneath autarky. Delay the aid of TWO diagrams, parallel the aspect delayout dealing and the aspect delay dealing and pretence the produces from dealing. Do all domiciliary consumers and domiciliary creators advantage from dealing? (8 marks) b**. Suppose the globe value of Amiable Y is higher than the domiciliary value of Amiable Y in Province A underneath autarky. Delay the aid of TWO diagrams, parallel the aspect domiciliary consumers and domiciliary creators advantage from dealing? 8 marks) Delay the aid of a diagram, explain why the finesse of a quota would advantage domiciliary creators but wound domiciliary consumers and adduce a deadweight waste to an husbanding. (8 marks) Structured Questions Dealing Organization, China has to attenuate its tariff on cotton. Suppose the globe value f cotton offal illegal followingcited the tariff diminution. a. Delay the aid ofa diagram, explain how the diminution in the tariff assumes the domiciliary value, domiciliary decrease, domiciliary workion and magnitude of imports of cotton. (7 marks) b. How does the tariff diminution assume the consumer residue, creator residue, empire return and aggregate gregarious residue? (5 marks) a. Parallel the chattelss of an extension in domiciliary require on the domiciliary value, domiciliary decrease, domiciliary workion and magnitude of imports if a province lays a tariff and a quota on its imports, respectively. 12 marks) b. Would consumers further a tariff or a quota in the aggravatehead aspect? (2 marks) Answers p. 150 1. They chiefly absence to cut the magnitude of imports so as to shield their domiciliary industries. Moreover, finesse of duties on superfluous upshot may breed empire return. . The finesse of duties get breed the domiciliary value of superfluous upshot, attenuate the magnitude of imports, inferior the consumer residue of domiciliary consumers, but extension the creator residue of domiciliary creators. 3. Frequent of Hong Kongs imports do not accept domiciliary substitutes, e. g. , breathe-into, buttress, raw materials. Moreover, the likeness of a permitted bearing facilitates Hong Kong's hawking delay its trading partners to attenuate their dealing barriers. On the perfect, permitted dealing adduces past advantage than wound to Hong Kong. p. 151 Discuss 12. 1 Aftercited tariffs are layd, the domiciliary values of imports stir. By the law of require, mob get buy fewer aces of imports. Aftercited the finesse of quotas, the apex quantities of imports recognized are trivialer than the equilibrium quantities. As a upshot, the quantities of imports get distil. As mob buy fewer aces of imports, they buy past aces of domiciliary upshot as substitutes for imports. Hence, domiciliary industries are shielded. p. 154 Discuss 12. 2 No. Delay permitted dealing, domiciliary values distil and domiciliary decrease stirs. As a upshot, the consumer residue extensions, as explaind by Area (C + E) in Fig. 12. 3. Hence, domiciliary consumers of imports produce. However, domiciliary values distil and domiciliary workion falls. As a upshot, the creator residue decreases, as explaind by Area C Therefore, permitted dealing does not advantage everybody. However, on the perfect, as consumers' produces are important than creators' wastees, the aggregate gregarious residue extensions, as explaind by Area E in Fig. 12. 3. Test Yourself 12. 1 At domiciliary values underneathneath (Pw + t), gone the value cannot caggravate the require [i. e. the globe value (PW) plus tariff (t)], importers are not geting to accoutre the amiable. Only domiciliary creators delay MC domiciliary value get accoutre. This bearingion of the accoutre incurvation is represented by row member ae. Gone the domiciliary husbanding is a trivial public husbanding, it cannot assume the globe value (PW) no subject how frequent aces it imports. At the domiciliary value of (Pw + t), gone the value can caggravate the (constant) require, importers are geting to accoutre as frequent aces as consumers yearn delayout exaltation the value. Even if require extensions, the domiciliary value get not stir aggravatehead (Pw + t). Hence, the accoutre incurvation turns mawkish at Point e (represented by row member eg).