ESSENTIALS OF ECONOMICS
ESSENTIALS OF ECONOMICS
11th Edition
ISBN: 9781260225334
Author: SCHILLER
Publisher: RENT MCG
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Chapter 1, Problem 4QFD
To determine

To analyze:The reason behind China’s military being twice as large as North Korea’s with China’s spending 2.1% of its GDP on the military and North Korea spending 19% of its GDP.

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The US space budget is $24billion. Why do countries spend so much money on space research?
In this problem, we want to think about the difficulties that governments face in agreeing to significantly reduce CO2 emissions in order to control climate change.   In the context of climate change, what phenomenon does China’s utility function capture? What does this exercise tell us about the limitations of the first welfare theorem? What do you think is an important aspect of trade in reality which is not captured by this model?
Consider a model with two countries, France and Germany. France exports wine to Germany, and Germany exports beer to France. In each country, the demand for wine is given by the demand curve Q D = 100 - P W, where Q D is the quantity demanded and P W is the price of wine. In each country, the demand for beer is given by the same demand curve, i.e., Q D = 100 – P B , where Q D is the quantity demanded and P B is the price of beer. The supply of wine in France is given by Q S = 2P W, where Q S is the quantity supplied, and the supply of wine in Germany is given by Q S = P W. The supply of beer in France is given by Q S = P B , and the supply of beer in Germany is given by Q S = 2P B . Suppose the government of France imposes a $10 per unit import tax on beer. Find the world price of beer, the domestic price in France, and the tariff revenue collected by the French government under this policy.
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