I am having a problem with one of my homework questions and would like some help if possible...here is the question..

According to an article in the New York Times (Nov. 5, 1993),"many Midwest wheat farmers oppose the NAFTA free trade agreement asmuch as many corn farmers support it." for simplicity, assume that the U.S. is a small country in the markets for both corn and wheat, and that without the free trade agreement, the U.S. would not trade these commoditites internationally..
Based on the report, do you think the world wheat price is above or below the U.S. no-trade wheat price? Do you think the world corn price is above or below the U.S. no-trade corn price? Now analyze the welfare consequences of NAFTA in both markets.

Assuming the farmers are self-interested in their own economic welfare...

If the wheat farmers oppose NAFTA, they must fear the US will become an importer of wheat; foreign countries want access to the US wheat market because of the relatively high prices in the US market. If corn growers support NAFTA, they see foreign markets as export possibilities because of the relatively high prices in the foreign markets.

Free trade almost always leads to a net increase in economic welfare, both domestically and internationally.

i love how it's 2020 and no one answered lol

O_O i feel bad.

Based on the article, we can make some inferences about the world wheat and corn prices in relation to the U.S. no-trade prices.

Regarding wheat:
- The fact that many Midwest wheat farmers oppose NAFTA suggests that they fear the U.S. will become an importer of wheat.
- Foreign countries want access to the U.S. wheat market because of the relatively high prices in the U.S. market.

From these observations, we can infer that the world wheat price is likely below the U.S. no-trade wheat price. This is because if the world wheat price was higher than the U.S. no-trade wheat price, it would indicate that foreign countries are willing to pay more for U.S. wheat, and the fear of becoming an importer would be lessened.

Regarding corn:
- Many corn farmers support NAFTA, seeing foreign markets as export possibilities because of the relatively high prices in those markets.

From this information, we can infer that the world corn price is likely above the U.S. no-trade corn price. This is because if the world corn price was lower than the U.S. no-trade corn price, it would suggest that the export possibilities in foreign markets are not lucrative enough to justify the support for NAFTA from corn farmers.

Now let's analyze the welfare consequences of NAFTA in both markets:

Wheat market:
- If the world wheat price is below the U.S. no-trade wheat price, it means that the U.S. is able to import wheat at a lower cost.
- This benefits consumers in the U.S. as they have access to cheaper wheat.
- However, it negatively affects domestic wheat farmers who will face increased competition from cheaper imports.

Corn market:
- If the world corn price is above the U.S. no-trade corn price, it means that the U.S. can export corn at higher prices.
- This benefits U.S. corn farmers as they have access to more lucrative foreign markets.
- However, it could potentially lead to higher corn prices domestically for consumers who rely on corn-based products.

Overall, the welfare consequences of NAFTA in both markets are dependent on the specific conditions of the world wheat and corn prices. However, free trade generally leads to increased economic welfare, both domestically and internationally.

To determine whether the world wheat price is above or below the U.S. no-trade wheat price, we can consider the following information:

1. The article states that many Midwest wheat farmers oppose NAFTA. This implies that they are concerned about increased competition from foreign wheat producers.

2. The article also mentions that foreign countries want access to the U.S. wheat market because of the relatively high prices in the U.S. market.

Based on this information, we can infer that the U.S. no-trade wheat price is likely higher than the world wheat price. If the U.S. were to engage in free trade (via NAFTA), it would open up its market to foreign wheat producers, potentially leading to an increase in wheat imports. The increased competition could drive down the domestic wheat price to be more in line with the world price.

Now let's consider the world corn price compared to the U.S. no-trade corn price:

1. The article states that many corn farmers support NAFTA, as they see foreign markets as export possibilities due to relatively high prices in those markets.

Based on this information, we can infer that the world corn price is likely lower than the U.S. no-trade corn price. By engaging in free trade, U.S. corn farmers would have the opportunity to export their corn to foreign markets where prices are relatively higher. This suggests that the U.S. no-trade corn price is higher than what can be obtained in the world market.

Analyzing the welfare consequences of NAFTA in both markets:

1. Wheat market: If the world wheat price is below the U.S. no-trade wheat price, the influx of cheaper imported wheat caused by NAFTA could potentially harm domestic wheat farmers' economic welfare. However, it could benefit consumers who would have access to cheaper wheat. Overall, the welfare consequences for the wheat market would depend on the magnitude of the price changes and the relative size and bargaining power of the different stakeholders.

2. Corn market: If the world corn price is lower than the U.S. no-trade corn price, NAFTA could provide an opportunity for U.S. corn farmers to export their corn to higher-priced foreign markets, potentially increasing their economic welfare. This could also benefit the domestic economy as a whole. However, it could also create more competition for domestic consumers and industries that rely on corn as an input.

It's important to note that these analyses are based on the given information and assumptions about market conditions. In reality, the effects of NAFTA on the wheat and corn markets would depend on various factors and could be more complex than the simplified scenario presented here.