here is the case.
While in Australia, you discover a raspberry jam with incredible flavour. You know Canadians would enjoy this product, so you import it. The jam sells in stores for $5.00 a jar, a slightly higher price than standrad jam. The Canadian consumer is willing to pay $5, but when some retailers try to sell it for $6, the demand drops condsiderably. As an importer you have been trying to hold the cost price constant.
1) What are the potential benefits for you and the jam manufacturer of this trade arrangement?
2) Explain one possible social cost of this international transaction.
3) What if the ocean freight rates go up 4%
4) What if Canada signs a free trade agreement with Australia?
5) What if the value of the Canadian dollar goes down 5% compared to the Australian dollar?
6)What if Australia has a drought, and the raspberry crop is harmed?
I really need answeres asap..thank you
1) Both you and the manufacturer make a profit.
2) A social cost would be that this import takes business away from Canadian jam manufactuerers.
What do you think the answers are for the next four questions?
We'll be glad to comment on your answers.
1) The price of jam will go up, because now it costs more to ship the product. How would u actually calculate this?
2) The cost of jam is going to go down, because now it is free to ship it from Australia to Canada.
3) I am not sure on this one..
4) No producing of jam, no selling of jam. So, the manufacturer will go bankrot, so would you.
If it costs 4% more to ship the product, then you'd pass this additional expense on to the customers.
4% * $5.00 = $0.20
A free trade agreement does not mean that the cost of shipping is free. It means that small or no tariffs are charged for imports.
i need as much help as i can get but right now i'm living at my grandmas so it can't cost and theres so many things in life right now that i can't focas.
1) The potential benefits for you, as the importer, would include the opportunity to meet the demand of Canadian consumers for a unique and flavorful product. This could lead to increased sales and profits for your business. For the jam manufacturer, the benefits would involve the expansion of their customer base and the potential for higher revenues by exporting their product to a new market.
To get this answer, I analyzed the situation where an importer brings a unique and flavorful product from one country (Australia) to another (Canada). I considered the potential benefits for both parties involved in the trade arrangement.
2) One possible social cost of this international transaction is the impact on local Canadian producers of raspberry jam. By importing the Australian jam and selling it at a slightly higher price, there is a likelihood of increased competition for local producers. This may result in reduced market share or even the closure of some domestic raspberry jam producers.
I arrived at this answer by considering the potential social costs associated with importing a product that competes with domestic producers and has a slightly higher price.
3) If ocean freight rates go up by 4%, it would increase the cost of importing the raspberry jam. As an importer trying to hold the cost price constant, this increase in freight rates would likely affect your profitability. The increased cost could potentially force you to either absorb the additional expense or pass it on to the consumers by increasing the retail price, which may further impact demand.
To answer this question, I considered the potential impact of a 4% increase in ocean freight rates on the cost price and profitability of the imported jam.
4) If Canada signs a free trade agreement with Australia, it could lead to various outcomes. On one hand, it could remove or reduce the barriers to trade, making it easier and more cost-effective to import the raspberry jam. This could benefit both the importer and the jam manufacturer by increasing market access and potentially reducing import costs. However, it could also intensify competition for the domestic raspberry jam market, which may have implications for local producers.
I arrived at this answer by considering the potential consequences of a free trade agreement between Canada and Australia and the impact it could have on the trade arrangement for the raspberry jam.
5) If the value of the Canadian dollar goes down 5% compared to the Australian dollar, it would make the imported raspberry jam relatively more expensive for Canadian consumers. This could potentially result in reduced demand as consumers may find the higher price less affordable or attractive. However, for the importer, it may create an opportunity to adjust the retail price in order to maintain profitability.
To answer this question, I took into account the potential impact of a 5% depreciation of the Canadian dollar against the Australian dollar on the demand and cost of the imported jam.
6) If Australia experiences a drought and the raspberry crop is harmed, it could lead to a reduction in the supply of raspberries available for making the jam. This could result in increased prices for raspberries in Australia, which may trickle down to the price of the imported jam. As a consequence, the importer may face higher cost prices and potentially explore alternative sourcing options to mitigate the impact of a reduced raspberry crop.
To answer this question, I considered the potential consequences of a drought in Australia and its impact on the supply and cost of raspberries for the jam manufacturer and the importer.