ECON 200 SFU Domestic Market for Laptops Question

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Economics

ECON 200

Simon Fraser University

ECON

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ECON 200 D Final Exam - Page 2 of 12 3/8/2023 1. (23 points) Consider the domestic market for laptops as shown in the graph below. (a) (5 points) If the laptop market is open for trade, will laptops be imported or exported? How do you know? (b) (5 points) On the graph above, indicate the regions represent consumer surplus and producer surplus if the market is open for trade. ECON 200 D Final Exam - Page 3 of 12 3/8/2023 (c) (5 points) After intense lobbying by domestic laptop manufacturers, the government decides to ban all trade in laptops so that the laptop industry exists in autarky. On the copy of the graph shown below, shade in the region represents deadweight loss from the trade restriction. (d) (3 points) Explain why there is a deadweight loss in the market under autarky even though the price and quantity of production will be where the domestic demand curve intersects the domestic supply curve. (e) (5 points) Suppose instead of moving back to autarky, the government now only wants to reduce the quantity traded. What are the two tools to achieve the goal? What are the similarities and di↵erences between these two tools? Considering their di↵erences, if you are running for an election, which tool are you in favor of?
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Student’s Name
Econ 200 D
Professor’s Name
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1. Domestic Markets for Laptops
a) If the laptop market is open for trade, laptops will be imported because the world price
(Pw) is lower than the domestic price (Pd). We know this because the world price line
intersects the domestic demand curve at a point to the right of the domestic supply curve,
which means that at the domestic price, the quantity demanded exceeds the q...


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