Question

Refer to Example 2.5 on the market for wheat. In​ 1998, the total demand for U.S....

Refer to Example 2.5

on the market for wheat. In​ 1998, the total demand for U.S. wheat was

QD=3,244−283P

and the domestic supply was

QS=1,944+207P.

At the end of​ 1998, both Brazil and Indonesia opened their wheat markets to U.S. farmers. Suppose that these new markets add

250 million bushels to U.S. wheat demand. What will be the​ free-market price of wheat and what quantity will be produced and sold by U.S.​ farmers?

The​ free-market price of wheat will be $ ___ per bushel.

​(Enter your response rounded to two decimal places.​)

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The​ free-market price of wheat will be $1.77 per bushel.

what quantity will be produced and sold by U.S.​ farmers --- 2310.39 million bushels.

calcuation: Equilibrium price and quantity are where Demand = Supply
3244 - 283P = 1944 + 207P
So, P = $2.65; Q = 3244 - (283 * 2.65) = 2493.18 million bushels

If 250 million bushels are added to the demand, then
demand = 2743.18 (2493.18+250 = 2743.18)
Then, according to Demand function, 2743.18 = 3244 - 283P
So, P = 1.77.

US producers will produce (supply function): 1944 + (207*1.77) = 2310.39 millin bushels.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
U.S. winter wheat production increased dramatically in 1999 after a bumper harvest. The supply curve shifted...
U.S. winter wheat production increased dramatically in 1999 after a bumper harvest. The supply curve shifted rightward; as a result, the price decreased and the quantity demanded increased (a movement along the demand curve). The accompanying table describes what happened to prices and the quantity demanded of wheat. 1998 1999 quantity demanded (bushels) 1.74 billion 1.9 billion average price (per bushel) $3.70 $2.72 a) Using the midpoint method, calculate the price elasticity of demand for winter wheat. b) What is...
Consider a country in which the domestic demand curve for wheat is Qd = 24 -...
Consider a country in which the domestic demand curve for wheat is Qd = 24 - p and the domestic supply curve is Qs = p. Now suppose the country can trade wheat in the world market at a price pw = 6 ($/unit).    a) (9 points) Illustrate graphically the equilibrium that arises under free trade. What are the quantities of wheat that would be demanded, produced and imported in this equilibrium? b) (9 points) Who benefits and who...
Consider a country in which the domestic demand curve for wheat is Qd = 24 -...
Consider a country in which the domestic demand curve for wheat is Qd = 24 - p and the domestic supply curve is Qs = p. Now suppose the country can trade wheat in the world market at a price pw = 6 ($/unit).    a) (9 points) Illustrate graphically the equilibrium that arises under free trade. What are the quantities of wheat that would be demanded, produced and imported in this equilibrium? b) (9 points) Who benefits and who...
The United States Department of Agriculture is interested in analyzing the domestic market for corn. The...
The United States Department of Agriculture is interested in analyzing the domestic market for corn. The USDA’s staff economists estimate the following equations for the demand and supply curves: Qd= 1600-125P Qs= 440+165P Quantities are measured in millions of bushels; prices are measured in dollars per bushel. A. Calculate the equilibrium price and quantity that will prevail under a completely free market. B. Calculate the price elasticities of supply and demand at the equilibrium values. C. The government currently has...
Consider a competitive market served by many domestic and foreign firms. The domestic demand for these...
Consider a competitive market served by many domestic and foreign firms. The domestic demand for these firms’ product is Qd= 1300 - 2.5P.The supply function of the domestic firms is QSD=50 + 1.5P,while that of the foreign firms is QSF= 250. Instructions:Enter your responses for equilibrium price rounded to the nearest penny (two decimal places). Enter your responses for equilibrium quantity rounded to one decimal place. a. Determine the equilibrium price and quantity under free trade. Equilibrium price: $ Equilibrium...
This article illustrates the political economy of international trade and the concept of comparative advantage. Explain...
This article illustrates the political economy of international trade and the concept of comparative advantage. Explain the nations who are the "Winners" and "Losers" (5 points) and why as described in this article, and the effect of "arbitrary government intervention" that circumvents the workings of free trade initiated by Senator Trent Lott as described in the article? Use the economic concept of comparative advantage in your explanation (5 points). Due Jan 15 As a side note - why do a...
Fueling Indonesians: Window of Opportunity or Regret? Kerosene is widely used as cooking fuel by Indonesian...
Fueling Indonesians: Window of Opportunity or Regret? Kerosene is widely used as cooking fuel by Indonesian households, with an annual usage of 10 million Kiloliters. It is a major subsidized fuel for household cooking, where its usage is over sixty percent of the 230 million population. The subsidy program costs the government heavily, where it amounts up to U.S.$4 billion a year. As the practice tends to bleed government expenditures quite heavily, the Indonesian government is embarking on a change...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT