Question

1 Define the market for soybeans in the US to be the market for soybeans purchased for consumption in the US. Approximately a quarter of soybeans grown in the US are exported to China. If China imposes a tariff on soybean imports from the US, what will happen to the equilibrium price and equilibrium quantity of soybeans in the United States market for soybeans?

2 Soybeans and corn are both used as animal feed. (70% of Soybeans are used as animal feed, and Corn is the primary animal feed in the US.) Also, on many farms, farmers can grow either soybeans or corn.

3 Ethanol is a fuel derived from corn. Ceteris parabus: If demand for ethanol fuel increases causing the equilibrium price of corn to increase, what will happen to the market for soybeans? Specifically, what will happen to the equilibrium price and equilibrium quantity of soybeans?

Answer 1

Sol 1 :

Equilibrium is the situation where demand and supply are equal to each other.

Equilibrium = Demamd = Supply

When China imposes tariff oj the imports, soyabean price will rise up in the China and Demand for the Soyabean in the China will reduces , therefore , exports of the US for soyabean reduces.

This will increases the supply in the US becuase of decrease in exports. And wil shift the supply curve to the right.

(NOTE : As per the policy , we have to solve only 1 question per post.)