8. Assume that the United States is an importer of televisions and there are no trade restrictions. U.S. consumers buy 1 million televisions per year, of which 400,000 are produced domestically and 600,000 are imported. (Worth 2 points)

a. Suppose that a technological advance among Japanese television manufacturers causes the world price of televisions to fall by $100. Draw a graph to show how this change affects the welfare of U.S. consumers and U.S. producers and how it affects total surplus in the united states.

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To analyze the effects of a technological advance in Japanese television manufacturing on the welfare of U.S. consumers and producers, as well as total surplus in the United States, we can use supply and demand analysis. Here are the steps to understand and depict these effects on a graph:

1. Start by drawing a graph with quantity on the x-axis and price on the y-axis.
2. Determine the original equilibrium price and quantity in the U.S. market for televisions. In this case, 400,000 televisions are produced domestically and 600,000 are imported, totaling 1 million televisions per year.
3. The demand curve will represent U.S. consumers' demand for televisions. Draw a downward-sloping, linear demand curve, originating from the point where price intersects the quantity of 1 million.
4. The supply curve will represent the total supply of televisions, combining domestic production and imports. Draw an upward-sloping, linear supply curve, originating from the quantity of 1 million and intersecting the original equilibrium price.
5. Label the original equilibrium price and quantity as P1 and Q1, respectively.
6. Now, assume there is a technological advance in Japanese television manufacturing, resulting in a $100 decrease in the world price of televisions. Since the U.S. is an importer, this decrease affects the market for televisions in the United States.
7. To show the impact of the technology advance, shift the supply curve downward by $100. This shift represents the decrease in cost of televisions due to the technological advancement.
8. The new supply curve will intersect the original demand curve at a new equilibrium point. Label this new equilibrium price and quantity as P2 and Q2, respectively.
9. The decrease in price benefits U.S. consumers as they can now purchase televisions at a lower price. This is represented by the increase in consumer surplus, which is the area above the new price (P2) and below the demand curve, up to the new quantity (Q2).
10. However, the decrease in price negatively affects U.S. producers, as they receive lower prices for their domestically produced televisions. This leads to a reduction in producer surplus, which is represented by the area below the new price (P2) and above the supply curve, up to the new quantity (Q2).
11. Total surplus in the United States is the sum of consumer surplus and producer surplus. Since consumer surplus increases while producer surplus decreases, the net effect on total surplus depends on the relative magnitudes of these changes.

By following these steps and comparing the changes in consumer surplus, producer surplus, and total surplus, you can accurately depict the effects of the technological advance in Japanese television manufacturing on the welfare of U.S. consumers, producers, and total surplus on the graph.

To understand how a technological advance among Japanese television manufacturers affects the welfare of U.S. consumers and producers, as well as total surplus in the United States, we can use the concept of supply and demand in international trade.

First, let's analyze the initial scenario:

- U.S. consumers buy 1 million televisions per year.
- 400,000 televisions are produced domestically.
- 600,000 televisions are imported.

Assume that initially, the world price of televisions is P₀.

To visually represent this scenario, we can first draw a graph with quantity of televisions on the x-axis and price on the y-axis. The graph will include the demand curve (D), the domestic supply curve (Sd), and the import supply curve (Si). The intersection of the supply and demand curves determines the initial equilibrium price and quantity.

Now, let's consider the effects of the technological advance among Japanese television manufacturers:

1. The world price of televisions falls by $100. This means the new world price becomes P₀ - $100.

To illustrate this change on the graph, the downward shift in the import supply curve (Si) will represent the decrease in the world price of televisions.

As a result, the new equilibrium price (P₁) will be lower than the initial equilibrium price, and the new equilibrium quantity (Q₁) will be higher than the initial equilibrium quantity.

Next, let's analyze the welfare effects on U.S. consumers, producers, and total surplus:

- U.S. Consumers:
The decrease in the world price of televisions benefits U.S. consumers because they can now purchase televisions at a lower price. This leads to an increase in consumer surplus, represented by the area between the demand curve (D) and the new equilibrium price (P₁) for the quantity consumed (Q₁).

- U.S. Producers:
The fall in the world price of televisions negatively affects domestic producers. As the world price decreases, domestic producers may find it more challenging to compete with imported televisions. This could lead to a reduction in domestic production and a decrease in producer surplus.

- Total Surplus:
The change in total surplus reflects the combined welfare of consumers and producers. Total surplus increases if the increase in consumer surplus outweighs the decrease in producer surplus. The extent of the change in total surplus depends on the specific shapes of the supply and demand curves.

By illustrating these changes on the graph, you can provide a visual representation of how the technological advance affects U.S. consumers, producers, and total surplus in the United States.