Question

Consider the market for wheat. Most farmers have loans that are based on flexible interest rates...

Consider the market for wheat. Most farmers have loans that are based on flexible interest rates (i.e. they change with the market rate). Starting off from equilibrium, demonstrate graphically (and write into a table) what happens to P,Q,q, and Profits in the short-run, and long-run, if the interest rate decreases. Provide explanation please!

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Wheat is produced under perfectly competitive conditions. Individual wheat farmers have U-shaped long-run average cost curves...
Wheat is produced under perfectly competitive conditions. Individual wheat farmers have U-shaped long-run average cost curves that reach a minimum average cost of $4 per bushel when 2,000 bushels are produced. a) Suppose that the market demand curve for wheat is given by Q = 2,600,000 - 200,000P. In long-run equilibrium, what will be the equilibrium price, quantity, and number of wheat producers? b) Suppose market demand shifts outward to Q = 3,200,000 - 200,000P. If farmers cannot adjust their...
Wheat is produced under perfectly competitive conditions. Individual wheat farmers have U-shaped long-run average cost curves...
Wheat is produced under perfectly competitive conditions. Individual wheat farmers have U-shaped long-run average cost curves that reach a minimum average cost of $4 per bushel when 2,000 bushels are produced. a) Suppose that the market demand curve for wheat is given by Q = 2,600,000 - 200,000P. In long-run equilibrium, what will be the equilibrium price, quantity, and number of wheat producers? b) Suppose market demand shifts outward to Q = 3,200,000 - 200,000P. If farmers cannot adjust their...
Suppose there are 1000 identical wheat farmers. For each, TC = 5+2q^2. Market demand is Q...
Suppose there are 1000 identical wheat farmers. For each, TC = 5+2q^2. Market demand is Q = 400,000 - 150p. Derive the short-run equilibrium Q, q, and p. The marginal cost of each firm is =______. In a competitive market, we equate MC to ______ to determine how much each firm should produce. The short-run supply curve for the firm is q=______. The supply curve for the market is Q=______. The short-run equilibrium price is $______. The market supply at...
Consider an open economy with flexible exchange rates. Let IS stand for the product market equilibrium...
Consider an open economy with flexible exchange rates. Let IS stand for the product market equilibrium condition, LM for the financial market equilibrium condition, and IP for the interest parity condition. a.Write done the equations for IS, LM and IP curve
Using the asset market approach (Uncovered Interest Parity holds), demonstrate the impact on the E($/€) graphically...
Using the asset market approach (Uncovered Interest Parity holds), demonstrate the impact on the E($/€) graphically (F/X graph) of a temporary increase in the money supply in the Eurozone. The U.S. is the home country. Label your short run equilibrium point B. How will this affect the U.S. interest rate and Price level in the short run?
Consider a world in which prices are sticky in the short-run and perfectly flexible in the...
Consider a world in which prices are sticky in the short-run and perfectly flexible in the long-run. APPP may not hold in the short run but does hold in the long-run. The world has two countries, the U.S. and Japan. Both countries are initially in a long-run equilibrium with fixed money supplies. If real GDP in the United States were to fall temporarily, how would the real interest rate and the real exchange rate be effected? Give a detailed explanation.
Analyzing hyperinflation using the forex and money market model. Hyperinflation is caused by large continuous increases...
Analyzing hyperinflation using the forex and money market model. Hyperinflation is caused by large continuous increases in money growth rate and as a result, prices become quite flexible even in the short run. Suppose there is an increase in expected inflation rate and current prices outpace the increase in money growth rate (so what happens to real money supply?). What is the implication on nominal interest rates and the current exchange rate? Draw the diagram and show the initial and...
Which of the following statements regarding bond prices and market interest rates are most likely to...
Which of the following statements regarding bond prices and market interest rates are most likely to be true? Bond prices and market interest rates will move in the opposite direction. Interest rate risk can be described as the changes in market interest rates that will cause fluctuations in a bond’s price. The prices of long-term bonds display greater price sensitivity to interest rate changes than do the prices of short-term bonds. I and II only. I and III only. II...
1. Suppose the Fed announces that interest rates will continue to rise in 2018. How would...
1. Suppose the Fed announces that interest rates will continue to rise in 2018. How would this impact the market for bonds? Would it impact demand or supply? Would it cause an increase or decrease? How would it impact the equilibrium quantity, price and interest rate? Select ALL that apply - The demand for bonds.... decreases/increases/stays the same -The supply of bonds...... decreases/increases/stays the same -The equilibrium quantity..... rises/falls -The equilibrium price...... rises/falls -The equilibrium interest rate..... rises/falls 2. Consider...
Which of the following statements regarding bond prices and market interest rates are most likely to...
Which of the following statements regarding bond prices and market interest rates are most likely to be true? Bond prices and market interest rates will move in the opposite direction. Interest rate risk can be described as the changes in market interest rates that will cause fluctuations in a bond’s price. The prices of long-term bonds display greater price sensitivity to interest rate changes than do the prices of short-term bonds. Group of answer choices I and II only. I...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT