Government of Canada Recently Signed a New Preferential Trade Agreement - Marketing Assignment Help

Assignment Task:

The Government of Canada recently signed a new preferential trade agreement and has agreed to pay compensation to turkey farmers, in light of the increased competition they will face from increased imports. You are employed as an analyst by AAFC. In order to determine the value of compensation, AAFC requires an estimate of how the Canadian price of turkeys and the volume of imported turkeys will change as a result of the new trade agreement. 
You are provided with the following information about the Canadian turkey market: 
1. The world price of turkey is $5. 2. The Canadian turkey market is currently (before the new trade agreement) protected by a tariff-rate quota of the following format: 
a) the in-quota tariff is $1 per unit b) the import quota volume is 100 units

c) the over-quota tariff is $10 per unit. 
3. An excess demand (ED) (for imports) function for turkey has been estimated as P = 28 — 0.14Q. 
a) Draw the diagram for imports in this market, and solve for the Canadian turkey price and the volume of imports. Label all relevant functions, axes, etc. (6 marks) 
• Hint: determine if the quota portion of the TRQ is binding by solving Q (using the ED function) at the in-quota price (Pw + t) and at the over-quota price (Pw + T). Can ED intersect your effective supply function at those Qs? Then determine Canadian P by plugging the Q that you solved into the ED function. 
b) The Canadian government is considering reducing the over-quota tariff to $6. Modify the diagram for this market, and solve for the Canadian turkey price and the volume of imports. Label all relevant functions, axes, etc.  
c) The government is considering increasing the import quota volume (quantity of turkey allowed in at thp in-quota tariff rata) from 100 units to 110 units (note that this would hp instead of reducing the over-quota tariff rate). Modify the diagram for this market, and solve for the Canadian turkey price and the volume of imports. Label all relevant functions, axes, etc. 
d) The Canadian government is considering reducing the in-quota tariff to $0.50 (note that this would be instead of the options in parts b and 
c). Modify the diagram for this market, and solve for the Canadian turkey price and the volume of imports. Label all relevant functions, axes, etc. 

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