A semiconductor is a key component in your laptop, cell phone, and iPod. The table provides information about the market for semiconductors in the United States. Producers of semiconductors can get $18 a unit on the world market. Quantity supplied (billions of units per year) Price Quantity demanded (dollars per unit) 10 25 12 20 20 14 15 40 16 10 60 18 5 80 20 100 a. With no international trade, what would be the price of a semiconductor and how many semiconductors a year would be bought and sold in the United States? b. Does the United States have a comparative advantage in producing semiconductors? c. Draw a graph (graph is for your own reference, not required to be attached in the answer sheet) to illustrate the U.S. supply and demand market for semiconductors. What is the price with free international trade? What is the quantity of semiconductors produced in U.S. and total quantity bought by U.S. people and the quantity exported from other countries? d. Due to loss of competitiveness brought on by appreciation of the exchange rate and the high production costs, U.S. government reduce the export (or limit the supply of domestic producers) by imposing an export quota of 20 billion units per year. What happens to U.S. price of semiconductors, the quantity of semiconductors bought by U.S. people, and the quantity of semiconductors exported? [hint: use equation to calculate the equilibrium]
A semiconductor is a key component in your laptop, cell phone, and iPod. The table provides information about the market for semiconductors in the United States. Producers of semiconductors can get $18 a unit on the world market. Quantity supplied (billions of units per year) Price Quantity demanded (dollars per unit) 10 25 12 20 20 14 15 40 16 10 60 18 5 80 20 100 a. With no international trade, what would be the price of a semiconductor and how many semiconductors a year would be bought and sold in the United States? b. Does the United States have a comparative advantage in producing semiconductors? c. Draw a graph (graph is for your own reference, not required to be attached in the answer sheet) to illustrate the U.S. supply and demand market for semiconductors. What is the price with free international trade? What is the quantity of semiconductors produced in U.S. and total quantity bought by U.S. people and the quantity exported from other countries? d. Due to loss of competitiveness brought on by appreciation of the exchange rate and the high production costs, U.S. government reduce the export (or limit the supply of domestic producers) by imposing an export quota of 20 billion units per year. What happens to U.S. price of semiconductors, the quantity of semiconductors bought by U.S. people, and the quantity of semiconductors exported? [hint: use equation to calculate the equilibrium]
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter2: The One Lesson Of Business
Section: Chapter Questions
Problem 2.1IP
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