Open, Free, and Fair Economic Environments In-class Group Exercise

Open, Free, and Fair Economic Environments In-class Group Exercise

The purpose of this exercise to prepare a report to submit to a public newspaper.

Form a team of 5 persons and prepare acover sheet for your report with your group member names, paper title, class name and date.

1) Research the soybean market for U.S. soybean exports to China over the last five years using the U.S. Census Web site.Write aone paragraph Overviewof how important U.S. soybean exports to China are and how they have grown over the last five years (prior to the trade war.)Include this paragraph as Page 1 of your report.

2) Graphically track theeconomic outcomesof different economic environments on key consumers and producers in the global soybean market.Include the requested series of graphs as an Appendix.

Draw a “realistic” series of graphs showing “soybean” market conditions in China and the USA (market prices and quantities sold) in four environments. Suggestion- draw China and U.S. market graphs side by side, and draw all eight graphs on one page so you can compare them. Use a ruler, label axes, and indicate key price and quantity values.

The four economic environments are:

a) China and U.S. withno trade (China soybean market and U.S. soybean markets are closed.)

b)Open but not free trade(China provides subsidies to Chinese soybean growers) but the price of Chinese grown soybeans with subsidies is still higher than U.S. soybeans.State what you assume about subsidies to U.S. soybean growers (do they exist or not.)

c)Free marketswith no Chinese subsidies to Chinese soybean growers and Chinese grown soybean prices are much higher than U.S. soybean import prices.

d)Markets with Chinese tariffs imposed on U.S. soybean imports from the U.S. after the U.S.

imposed tariffs on Chinese imports to the United States.

Graphically identify theproducer surplus for U.S.growers and consumer surplus for Chinese consumers for each of the four environments.

3)After the cover page and the Introduction paragraph page write a one page report explaining the economic consequences of the economic environments onU.S. soybean growers and Chinese soybean consumersreferencing your graphs and the changes in surplus (i.e. welfare) measures. Pay special attention to explaining who gains and who loses in these markets. Remember your audience is the readership of a public newspaper.

 

4) On the next (last) page of your report (ahead of the appendix) write a paragraph identifying two strategies that the U.S. growers should consider for the remainder of 2018 and 2019 and a paragraph identifying two actions that Chinese consumers of soybeans should ask the Chinese government for.

P.S. If you cite data or information from other sources remember to provide proper citations.

 
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