Economics: The Basics 1st Edition by Mike Mandel

Exercise 1

Suppose shipping costs rose (perhaps because of higher oil prices).
a) Would this increase in shipping costs affect the supply curve or the demand curve for imports? Show your answer on a supply-demand diagram.
b) What would happen to the quantity and price of imports?
c) Would this increase in shipping costs affect the supply curve or the demand curve for exports? Show your answer on a supply-demand diagram.
d) What would happen to the price and quantity of exports?