Question

Suppose Demand is P=100-[10/3]Q and supply is P=Q.

Mark on a new diagram a world price of 30 (1 mark); explain why no goods will be bought or sold at the autarky price (1 mark); how much is demanded at price 30? (1 mark); how much is supplied (1 mark); explain what happens to the difference between supply and demand at that price (1 mark).

Question 3 Mark on a new diagram a world price of 20 (1 mark); explain why no goods will be bought or sold at the autarky price (1 mark); how much is demanded at price 20? (1 mark); how much is supplied (1 mark); explain what happens to the difference between demand and supply at that price (1 mark).

Question 4 Mark on two new diagrams (i) a negative consumption externality with a constant value of -20 for every unit consumed and seperately (ii) a negative production externality with a constant value of -20 for every unit consumed.

Does free trade always improve welfare? (1 mark) Consider a market with the production and consumption externalities described in Question 4 (seperately, not together), and explore the cases when the world price is 20 or 30.

(i) no trade with only a production externality vs (ii) importing with only a production externality and

(iii) exporting with only a production externality. Then consider the consumption externality case by calculating welfare in the following cases (again, 1 mark each) (iv) no trade with only a consumption externality vs (v) importing with only a consumption externality and (vi) exporting with only a consumption externality.

Answer #1

Question 1)

at autarky price, demand equals supply implies Q=100-(10/3)Q

Q=23.08 and P=23.08

and if world price is 30, the graph would be as follows:

no good would be bought or sold at the autarky price which is the market clearing price when operating in a closed economy but here we are considering world prices so the economy would produce or demand goods based on the world price.

At price 30, quantity demanded is 21units and quantity supplied is 30units as indicated in the above graph as well.

Quantity supplied is greater the quantity demanded means there will be a surplus in the economy and more are produced in order to supply to the world markets while also satisfying the domestic demand.

Assume that the demand and supply curves for coffee in the US
are:
Demand: P = 350 – QD Supply: P = 20 + 0.1QS
a) Determine the equilibrium prices and quantities if there is no
international trade?
b) Determine the equilibrium quantities (supply and demand) for the
US if the nation can trade freely with the rest of the world at a
price of 60? In another word, find out the quantity demanded and
supplied in the US at...

Suppose that the world price for a good is 120 and the domestic
demand-and-supply curves are given by the following equations:
Demand: P = 200 – 8Q
Supply: P = 20 + 10Q
a. How much is domestic
consumption?
b. How much is domestic
production?
c. Calculate the values of
consumer and producer surplus.
d. If a tariff of 30% is imposed,
how much do consumption and domestic production change?
e. What is the change...

2. Draw demand and supply curves to find the world price and
tariff price of your goods. Suppose at the world price of $13;
10,500 units are produced domestically, and 16,700 units are
consumed. When a tariff of $2 per unit causes the price to rise to
$15, domestic production rises to 12,000 units, and domestic
consumption falls to 14,500 units. 1) Construct demand and supply
functions.

Suppose the world price for a good
is 40 and the domestic demand-and-supply curves are given by the
following equations:
Demand: P = 80 – 2Q
Supply: P = 5 + 3Q
a. How much is
consumed?
b. How much is produced
at home?
c. What are the values
of consumer and producer surplus?
d. If a tariff of 10
percent is imposed, by how much do consumption and
domestic production change?
e. What is the change in
consumer and...

Assume California's supply and demand curve for beef is: Dc =
800 - 10P, Sc = 200 + 30P
a) Derive and graph California's import demand schedule. If
Claifornia's agricultural deprtment outlawed purchasing out of
state beef to prevent the slaughter of unhappy cows, what would the
price of beef be (i.e, what is the price of beef in autarky)?
b) Now consider Nebraska, with the following demand and supply
schedules for beef: Dn = 100 -5P, Sn = 40...

Suppose the supply and demand for a certain textbook are given
by supply: P=(1/2)q ^2 and demand P=(-1/2)q^2+30
where p is the price and q is the quantity. Find the demand
quantity and the supply quantity at a price of
$25
1)The number of books that are demanded at a price of $25
is........
and the number of books supplied at a price of $25 is......
(Round to the nearest whole number as needed.)

The inverse demand curve for wheat is p = 10 – 0.10Q and the
inverse supply curve is p = 0.40Q, where p = dollars per bushel and
Q is billions of bushels of wheat. Wheat is bought and sold in a
perfectly competitive market.
a. Provide a graph of the market for wheat and calculate and
show the equilibrium price and quantity (in billions of bushels) in
the market.
b. If the government provides a price support of $9...

Consider an importing with an import demand function given by
p=120-q, which faces an export supply function of p=2q. The
governent decides to impose a traiff of $3 per units of imports 1.
calculate the Domestic Price and consumption before and after the
imposition of traiff. 2. What is the world price of the imprts
before and after the imposition of the traiff? 3. Does this country
benefit from the imposition of traiffs? By how much?

Consider an importing with an import demand function given by
p=120-q, which faces an export supply function of p=2q. The
governent decides to impose a traiff of $3 per units of imports
1. calculate the Domestic Price and
consumption before and after the imposition of
traiff.
2. What is the world price of the imprts before and
after the imposition of the traiff?
3. Does this country benefit from the imposition of traiffs? By
how much?

2. The European Union (EU) and United States (US) demand and
supply equations for corn are:
QDEU = 70 – 2P
QSEU = 20 + 3P
QDUS = 130 – 3P
QSUS = 30 + P
where QD and QS represent the quantities demanded and supplied
in both countries (in billions of tons) and P represents the Dollar
price per ton of corn in each country.
Now assume that there is free trade between the European Union
and US.
e....

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