Week 7 assignments
Task 1: Consider the following table of costs for the Winsome Widget Factory, which operates in a perfectly competitive market. The market price faced by this firm is $6.00 per widget.
a. Fill in the formula for AFC, AVC, ATC, MC, TR, MR, and Total Profit at the top of the column in the gray section within the table.
b. Fill in the missing values for TFC, TVC, AFC, AVC, ATC, MC, TR, MR, and Total Profit in the blue sections of the table.
| Winsome Widget Factory |
|Output |Total Fixed ...view middle of the document...
Now, the government succumbs to lobbying by wingding producers and imposes a protective tariff on wingdings amounting to $2 per wingding. The graph below represents this situation.
World PriceWorld Price + TariffU.S. SupplyU.S. DemandPriceQuantity (millions of pounds)61216182668104Market for Wingdings
Part I: Answer the following questions. Use formulas and show calculations as well as final answers.
A. Does the United States have a comparative advantage in wingdings? Explain.
B. Discuss the effect of the tariff on the number of imports..
C. How did the imposition of the tariff change consumer surplus?
D. How did the imposition of the tariff change producer surplus?
E. What is the overall result of the tariff in terms of welfare?
Part II. Allowing free trade between countries can be beneficial, but it also imposes costs. Use the ITT Tech Virtual Library to research costs and benefits of allowing free trade. Discuss aspects of international trade that some may consider unfair. For example:
i. Distribution of costs and benefits of free trade. In other words, does everyone share in the gains and the costs equally?
ii. Competing with different labor restrictions (or lack of), such as slave or child labor.
iii. Differences in environmental standards. Answers vary.
Attach a Word document of 500 minimum words.
Format: Double line space, Times New Roman, 12-point font
Formulas and calculations must be shown along with the final correct answer.
Formal references in APA format must be provided.
This submission must be paraphrased in your own words. Adhere to the academic honesty policy.
No more than 10% of your document can be quoted. Avoid answering any of the questions with a quote. Quotes should support your discussion instead of answering questions for you.
Project Part 3 Introduction: Research and analyze the effects of the following government policies on the market equilibrium.
Increases in the Minimum Wage
Restrictions on International Trade
Natural Monopolies and Antitrust Regulation
When analyzing these policies, include some discussion of the following points when appropriate:
What is the purpose of the policy?
Why is the policy necessary?
The welfare of consumers, producers, and society (the winners and losers) before and after the policy
The distribution of costs and benefits
Does government intervention improve the situation?
Course Objectives Tested:
1. Explain key microeconomic terminology.
2. Differentiate between microeconomics and macroeconomics.
3. Create and use economic graphs and numerical models to analyze and solve microeconomic problems.
4. Explain the costs and benefits of international trade, including calculation of gains from trade.
5. Analyze the impact of government activity in markets.
6. Determine optimal consumer buying decisions in the context of utility theory.