Economic welfare analysis in india rubber essay

I no longer endorse all the statements in this document. I think many of the conclusions are still correct, but especially section 1 is weaker than it should be, and many reactionaries complain I am pigeonholing all of them as agreeing with Michael Anissimov, which they do not; this complaint seems reasonable. This document needs extensive revision to stay fair and correct, but such revision is currently lower priority than other major projects.

Economic welfare analysis in india rubber essay

Within the scenario, India is either an importing country or an exporting country, it import large amount of rubber and export were insignificant. Figure a-2 shows that India as an importing country of natural rubber.

Trade force the domestic price fall and Need essay sample on "Economic welfare analysis in India Rubber"? In this situation, domestic buyers are better off due to them now can buy rubber in lower price. However, domestic producer are damaged because they sell the rubber owe in lower price.

Moreover, consumer surplus and producer surplus also change and the change size also measure the amount of gain or loss. In any event, the gains of buyer exceed the losses of sellers, and total surplus grow by the area D natural rubber, the consumer welfare, producer welfare and total economic welfare of natural rubber market changes respectively.

Economic welfare analysis in india rubber essay

However, the gains from international trade exceed the losses which means the increases could compensate the decreases and still be better off. As Table a-3 shows, the total surplus also can treat as total economic welfare rises in area D and it represents the gain from the trade.

In other words, trade internationally make India better off no matter India is deemed to be the importing country or exporting country. It means that, the quantity of rubber demanded is stable however the and demand curve stay the same.

Furthermore, at initial equilibrium, the IQ represents the price that these two curves cross and named as the initial equilibrium price, additionally, Pl called the initial equilibrium quantity.

In the year PAYOFFdue to the decline quantity of rubber production, the supply curve moves and shifts to the left from Supply-I to Supply-II as Figure b-l illustrated, it also means that at every price, the total amount of natural rubber that rubber producer are able to sell is decreased.

Accordingly, Supply-II curve and demand curves intersect in the point of New equilibrium. UP and SQ represent the new equilibrium price and new equilibrium quantity respectively.

Consequently, as Figure b-l shows, the shift in the supply curve lead to the equilibrium price raises from Pl to UP and lowers the equilibrium quantity from IQ to SQ. When illustrate Figure c-1 shows that, as an importing country, before import tariff, India domestic price falls and equals the world price.

Furthermore, as indicated earlier, when India assess trade internationally, domestic sellers are suffer loss by world price and contrastingly, domestic buyer gain from global trade.

Moreover, without tariff, the tax revenue government earned nothing and total economic welfare increased. However, when government concentrating attention on import tariff, the economic welfare changes.

As Figure c-1 shows that, a tariff make the price of import rubber above the world price by amount of the tariff. When compete with suppliers of rubber imported, domestic producer now can sell their natural rubber for world price plus tariff.

Hence, either domestic suppliers or imported suppliers increase the rubber price by the amount of tariff. Domestic seller and domestic buyer also change their surplus because import tariff raise the price of rubber, with figure c-1, the tariff reduce the domestic quantity emended from SQL to Qua and increase the domestic quantity demanded from SSL to Sq.

Economic welfare analysis in india rubber essay

It means import tariff decrease the quantity of imports and make rubber market closer to its initial equilibrium before trade internationally.

Additionally, import tariff make domestic producer in better situation but domestic buyers suffer loss, and government earn tax revenue from tariff. Furthermore, the government revenue equal to area F which is the quantity of after-tariff imports multiply by the size of tariff.As an amusing side note, in a science essay called "The Sight Of Home" Isaac Asimov once calculated how far an interstellar colony would have to be from Terra before Sol was too dim to be seen in the colony's night sky with the naked out that colonies further than 20 parsecs (65 light-years) cannot see Mankind's Homestar, because Sol's apparent magnitude is dimmer than 6.

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