Question

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 a $4.50 bushel support price
in place. What impact will this support price have on the market?
Will the government be forced to purchase corn under a program that
requires them to buy up any surpluses? If so, how much?

Answer #1

(A) In equilibrium, Qd = Qs

1600 - 125P = 440 + 165P

290P = 1160

P = $4

Q = 1600 - (125 x 4) = 1600 - 500 = 1100

(B) When Q =Qd = Qs = 1100 & P = $4,

Elasticity of demand = (dQd/dP) x (P/Qd) = - 125 x (4/1100) = - 0.45

Elasticity of supply = (dQs/dP) x (P/Qs) = 165 x (4/1100) = 0.60

(C) When P = $4.5,

Qd = 1600 - (125 x 4.5) = 1600 - 562.5

Qs = 440 + (165 x 4.5) = 440 + 742.5 = 1182.5

Since Qs > Qd, there is a surplus equal to (1182.5 - 562.5) = 620 units.

Therefore government will be forced to buy this surplus at $4.5 per unit, for a total of ($4.5 x 620) = $2790.

The U.S. Department of Agriculture is interested in analyzing
the domestic market for soybean. The USDA’s staff economists
estimate the following equations for the demand and supply curves:
The demand curve of soybean is P = 700 - 2Qd, and the supply curve
of soybean is: P = 200 + 3Qs where P represents price of soybean in
dollars per bushel and Q represents quantity of soybean in
bushels.
1. Suppose that the government passes a farm support bill that...

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....

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...

The corn market is perfectly competitive, and the market supply
and demand curves are given by the following equation: Qd
=50,000,000 – 2,000,000 p Qs = 10,000,000 +5,500,000 p Where Qd and
Qs are quantity demanded and quantity supplied measured in bushels,
and P= price per bushel.
1) Determine consumer surplus at the equilibrium price and
quantity.

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...

Suppose the market for corn is given by the following equations
for supply and demand:
QS = 2p − 2
QD = 13 − p
where Q is the quantity in millions of bushels per year and p is
the price.
Calculate the equilibrium price and quantity.
Sketch the supply and demand curves on a graph indicating the
equilibrium quantity and price.
Calculate the price-elasticity of demand and supply at the
equilibrium price/quantity.
The government judges the market...

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...

- please use keyboard (don't use handwriting)
- please use your own words don’t copy and paste (no
plagiarism)
- no pictures containing text
Problem 2
Suppose the market for corn is given by the following equations
for supply and demand:
QS = 2p − 2
QD = 13 − p
where Q is the quantity in millions of bushels per year and p is
the price.
Calculate the equilibrium price and quantity.
Sketch the supply and demand...

Suppose the demand function for corn is Qd = 10 – 2p, and supply
function is Qs = 3p
– 5. The government is concerned that the market equilibrium
price of corn is too
low and would like to implement a price support policy to
protect the farmers. By
implementing the price support policy, the government sets a
support price and
purchases the extra supply at the support price. In this case,
the government sets the
support price p =...

1) Suppose the domestic supply (QS U.S.) and demand (QDU.S) for
bicycles in the United States is represented by the following set
of equations:
QS U.S. = 2P
QDU.S. = 200 – 2P.
Demand (QD) and supply (QS) in the rest of the world is
represented by the equations:
QS = P
QD =160 – P. Quantities are measured in thousands and price, in
U.S. dollars. After the opening of free trade with the United
States, if the world price...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 18 minutes ago

asked 24 minutes ago

asked 29 minutes ago

asked 32 minutes ago

asked 39 minutes ago

asked 53 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago