Answer Happy

Consider trade in steel between two countries, Brazil and Spain. Brazil's price is $400 per ton of steel. Suppose that Spain is a "small" country and is unable to influence the Brazilian (world) price of steel. The following table shows Spain's supply and demand schedules. Price (Dollars) 0 200 400 600 800 PRICE (Dollars per ton) 1200 1100 1000 900 €800 700 600 On the following graph, use the blue points (circle symbol) to plot Spain's demand curve and the orange points (square symbol) to plot Spain's supply curve. (Hint: Be sure to use all points given in the table.) Then use the grey line (star symbol) to plot Brazil's supply curve. (?) 500 400 1200 300 200 1000 100 0 0 Quantity Supplied (Million tons) 1 2 0 + 3 2 4 6 8 10 12 Quantity Demanded (Million tons) 4 5 6 7 8 QUANTITY (Million tons) 12 10 8 6 4 2 0 9 10 11 12 O Demand O Supply SFree trade Ss Subsidy
Assuming free trade, which of the following statements are correct? Check all that apply. Spain's producer surplus is $800 million, and its consumer surplus is $3,200 million. Spain's producer surplus is $3,200 million, and its consumer surplus is $800 million. Spain produces 8 million tons of steel. Spain purchases 8 million tons of steel. Now suppose the Brazilian government grants its steel firms a production subsidy of $200 per ton. Use the black line (cross symbol) to plot Brazil's subsidy-adjusted supply curve on the previous graph. The new market price of steel is $ per ton. At this price, Spain produces million tons of steel. tons of steel, and imports The subsidy results in which of the following changes? Check all that apply. The Spanish economy as a whole loses $1,200 million because of the subsidy. Spain's producer surplus rises by $600 million. Spain's consumer surplus rises by $1,800 million. The Spanish economy as a whole gains $1,200 million due to the subsidy. million tons of steel, consumes million