124 points] I want you to think about international trade from the perspective o

Question

124 points] I want you to think about international trade from the perspective of leader of a small a) Would it ever be in Erehwon's interest to decide, unilaterally, to remove all quotas and b) Dr. Manley knows that Erehwon needs to raise some taxes if only to provide essential c) Other countries or coalitions of countries are large enough to change world prices through 2. conomy, ie, one that is too small to affect world prices. Dr. Manley, the leader of this country alled Erehwon, cares about all its citizens. reduce all tariffs to zero? Explain. public goods. Please advise Dr. Manley the best you can on the relative merits of taxing imports of manufactured goods versus taxing consumption of manufactured goods. their actions, so their behavior may well affect welfare in Erehwon. Are the implications (in Erehwon) the same if a trading partner such as China decides to tax Chinese exports to Erehwon versus subsidizing Chinese exports to Erehwon? Explain. Should Erehwon fear or welcome an inflow of foreign direct investment into the manufacturing sector knowing that labor is free to move between manufacturing and agriculture but that the domestic capital stock is essentially stuck in its current location whether that be agriculture or manufacturing? Explain. d) BONUS [0-5] If Erehwon is eager to do its part to reduce greenhouse gas emissions by regulating emissions of its manufacturing sector, what is likely to happen to its imports of manufactured goods and exports of agricultural goods? Explain. e)

Explanation / Answer

A. As per the Erehwon the interest on the tarrif and quotes were depend on the interest of themselves. As the trade affect the economy also the quotes than definitely it might think to achive the target with the specfic time period.

B. As per Dr. Manley the taxing import of manufacturing goods should be very easily as they provide the proper tarrif and quotes and also the Erehwon might not have interest on it and for the consumption of manufacturing good the consumer need to understand the situation.

C. There are difference between the tax of the Chinese exports to Erehwon versues subsidizing Chinese export to Erehwon because as per there thinking it is not possible to achieve the target as per the situation and also the more importantly it will definitely help them to achive the target.

D. Erehown welcome an inflow of FDI into the manufacturing sector as it leads to remove all the tarrif and quotes barriers from that place.

E. There should be decline in the import of the manufacturing goods and from declining it the export of agriculutural goods also get decline.

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