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Now you have a go!!Question 12.1Using the same quantities of resources, to produce rice and cloth, China and Pakistan havethe following production outcomes:Country Kilos of rice Opportunitycost of 1 kilo ofriceMetres of clothChina 5 4Pakistan 3 3Opportunitycost of 1 metreof clotha. Calculate the opportunity costs for the table.b. Draw a fully-labelled diagram to illustrate the information in the table on the graphbelow:c. Should trade take place between China and Pakistan? Why?d. In which product should each country specialize? Why?Produced by Ian Dorton & Jocelyn Blink Page 55
Topic 13 – Tariffs, quotas, and subsidiesYou need to be able to: Calculate from diagrams the effects of imposing a tariff on imported goods ondifferent stakeholders, including domestic producers, foreign producers, consumersand the government. Calculate from diagrams the effects of setting a quota on foreign producers ondifferent stakeholders, including domestic producers, foreign producers, consumersand the government. Calculate from diagrams the effects of giving a subsidy to domestic producers ondifferent stakeholders, including domestic producers, foreign producers, consumersand the government.Since the models covered in international trade are microeconomic models, it is poss<strong>ib</strong>le thatyou could be asked to construct a demand and supply curve for a product in a domesticmarket and then be required to carry out some of the procedures below.Let us first construct such a market:The market for cooking oil has the following demand and supply functions:Q D = 3 – Pand Q S = PWhere price is given in dollars per litre of cooking oil and quantity is given in millions of litresof cooking oil per month.Plot the demand and supply curves for cooking oil from the functions above and identify theequil<strong>ib</strong>rium price and quantity. (If you have forgotten how to do this, then see pages 3 to 7.When we plot the curves, we get the diagram below:Calculating from diagrams the effects of imposing a tariff on imported goods ondifferent stakeholders, including domestic producers, foreign producers, consumersand the government.Once a diagram has been given or drawn, you may be asked to include world supply curvesand tariffs and to calculate different effects of the tariff.E.g.Using the diagram above:Produced by Ian Dorton & Jocelyn Blink Page 56
Page 1 and 2: IB HIGHER LEVEL ECONOMICSQUANTITATI
Page 3 and 4: Topic 1 - Linear Demand and Supply
Page 5 and 6: Have you fully labelled the axes?Ex
Page 7 and 8: Now you have a go!Question 1.2On th
Page 9 and 10: Question 1.5On the graphs below, pl
Page 11 and 12: Topic 2 - ElasticitiesPrice Elastic
Page 13 and 14: Cross Elasticity of Demand (XED)You
Page 16 and 17: Topic 3 - Specific Taxes and Subsid
Page 18 and 19: Now you have a go!Question 3.1In th
Page 20 and 21: Substitute $4 as P in either equati
Page 22 and 23: SUBSIDIESPlot demand and supply cur
Page 24 and 25: The original producer surplus was t
Page 26 and 27: 2400 = 600PP = $4Substitute $4 as P
Page 28 and 29: Topic 4 - Price ceilings and price
Page 30 and 31: Now you have a go!Question 4.1In th
Page 32 and 33: Step 3Calculate from the diagram th
Page 34 and 35: Marginal product =In the table abov
Page 36 and 37: E.g. The firm below has revenues ba
Page 38 and 39: E.g.(2) The firm below has the foll
Page 40 and 41: ) Firm BQuantity Price AVC ATC300 $
Page 42 and 43: Produced by Ian Dorton & Jocelyn Bl
Page 44 and 45: Topic 12 - Comparative AdvantageYou
Page 48 and 49: 1. Add the world supply curve if fo
Page 50 and 51: 3. Calculate the amount of revenue
Page 52 and 53: Now you have a go!!Question 13.1In
Page 54 and 55: Question 13.3In the market for bott
Page 56 and 57: i. Make a table to show the demand
Page 58 and 59: Topic 15 - Balance of paymentsYou n
Page 60 and 61: Question 15.1An extract from the ba

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