Question

1. Consider a small open economy. Suppose the market for corn in the Banana Republic is competitive. The domestic market demand function for corn is Qd = 10 − 0.5P and the domestic market supply function is Qs = P − 2, both measured in billions of bushels per year. Also, assume the import supply curve is infinitely elastic at a price of $4 per bushel.

(a) Suppose the government imposes a tariff of $2 per bushel. What will the new equilibrium price and quantity be? What is the domestic consumer surplus? domestic producer surplus? government tax revenue? deadweight loss? Show all of these numerically and graphically.

(b) Ignore part (1a).

Suppose the government imposes an import quota such that the domestic equilibrium price is PQ = 6. What is the domestic consumer surplus? domestic producer surplus? Foreign producer surplus? deadweight loss? Show all of these numerically and graphically.

***ONLY ANSWER 1b PLEASE**

Answer #1

Consider a closed economy. Suppose the market for corn in banana
republic is competitive. The domestic market demand function for
corn is Qd=18 -P and the domestic market supply function is Qs=P-2,
both measured in billions of bushels per year. In order to help the
corn industry, the government initiated a price support program by
purchasing 2 billion bushels corn in the market.
a) draw a graph to show the new market equilibrium
price and quantity without calculating the number....

Deadweight Loss] Suppose the market for corn in Banana Republic
is competitive. The domestic supply and demand function of corn is
Qs = 10P and Qd = 100 − 10P, respectively. Both of them measured in
billions of bushels per year.
(a) Calculate the equilibrium price and quantity,
consumer surplus (CS), and producer surplus (PS).
(b) Suppose the government offers a subsidy of $2 per
bushel to the firms. In equilibrium, the consumers are paying $4
per bushel and the...

Q3: The market for barley is represented by Q = 8,600 – 20P and
Q = 30P – 600 where Q is the quantity of barley measured in tonnes
and P is the price of barley per tonne measured in dollars.
Hint: Demand and supply graphs are useful for the following
questions. They do not need to be precise and you do not need to
submit the graphs.
a) What are the equilibrium price and equilibrium quantity in
this market?...

The market for apples is perfectly competitive, with the market
supply curve is given by P = 1/8Q and the market demand curve is
given by P = 40 – 1/2Q.
a. Find the equilibrium price and quantity, and calculate the
resulting consumer surplus and producer surplus. Indicate the
consumer surplus and producer surplus on the demand and supply
diagram.
b. Suppose the government imposes a 10 dollars of sale tax on
the consumer. What will the new market price...

4. Suppose the domestic supply and demand curves for petroleum
in the U.S. are, Qs = 10P - 300 Qd = 3000 - 20P Let the world trade
price be $50 per barrel. 1) What is the equilibrium quantity of
imports? 2) Suppose a specific tariff of $10 per barrel is imposed.
Calculate Consumer surplus, producer surplus, and tariff revenue.
3) Suppose the government imposes an import quota of 1200 units of
barrels. Find the trading price for petroleum.

Suppose the market demand for a commodity is given by the
download sloping linear demand function:
P(Q) = 3000 - 6Q
where P is a price and Q is quantity. Furthermore, suppose the
market supply curve is given by the equation:
P(Q) = 4Q
a) Calculate the equilibrium price, quantity, consumer surplus
and producer surplus.
b) Given the equilibrium price calculated above (say's P*),
suppose the government imposes a price floor given by P' > P*.
Pick any such P'...

Suppose the corn market has the following equations: QD = 3000 -
400P QS = 900 + 300P Where QD and QS are quantity demanded and
quantity supplied measured in bushels, and P = price per
bushel.
Determine consumer surplus at the equilibrium price and
quantity. 6 marks
Assume that the government has imposed a price floor at $3.50
per bushel and agrees to buy any resulting excess supply. How many
bushels of corns will the government be forced to...

Consider a small open economy of Guyana that faces the following
domestic demand and supply for sugar. Supply: Q = 0.25P − 2.5
Demand: Q = 50 − P where quantity is in metric tons and price is in
Guyanese dollars (GYD).
Suppose the world price of a metric ton of sugar is GYD 20. What
is the quantity of sugar that the country imports?
Feeling that local producers of sugar need protection from
foreign competition, the government imposes a...

Suppose Mexico is importing steel from Russia. Now Mexico
imposes a binding import quota on the import of steel from Russia.
Draw and label a graph showing the effect of the import quota on
Mexican domestic price of steel, the change to domestic Mexican
consumer surplus and the change to domestic Mexican producer
surplus. Indicate in your graph the quota rents. If Mexico allows
Russia to administer the import quota program, what is the total
economic welfare loss to Mexico?

A.1. a. Suppose the demand function P = 10 - Q, and the supply
function is: P = Q, where P is price and Q is quantity. Calculate
the equilibrium price and quantity.
b. Suppose government imposes per unit tax of $2 on consumers.
The new demand function becomes: P = 8 – Q, while the supply
function remains: P = Q.
Calculate the new equilibrium price and quantity. c.
Based on (b), calculate the consumer surplus, producer surplus, tax...

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