Question

A country imports 5 million pounds of sugar per year and domestically produces another 5 million...

A country imports 5 million pounds of sugar per year and domestically produces another 5 million pounds. The world price of sugar is 25 cents per pound, and unlimited quantities of sugar are available at that price—the world supply curve of sugar is perfectly elastic. Assuming linear schedules, economists estimate the price elasticity of domestic supply to be 0.3 and the price elasticity of domestic demand to be 0.15 at the current equilibrium.

a. Use the given price elasticity and market equilibrium data to derive the domestic sugar demand and supply equations, and graph your results.

b. If no sugar could be imported, compute and show (on the graph created for (a)) the equilibrium domestic sugar price and quantity.

c. Compute and show on your graph the change in Consumer Surplus and Producer Surplus that free trade makes possible. That is, compare the situation when no imports are allowed to the situation first described in the question.

d. How would you measure the efficiency consequences of placing a ban on all sugar imports?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
Q) Sugar Import Ban. The sugar industry is another example of an increasing-cost industry. If the...
Q) Sugar Import Ban. The sugar industry is another example of an increasing-cost industry. If the price of sugar is only 11 cents per pound, sugar production is profitable in areas with relatively low production costs, including the Caribbean, Latin America, Australia, and South Africa. At a price of 11 cents, the world supply of sugar equals the amount produced in these areas. As the price increases, sugar production becomes profitable in areas where production costs are higher, and as...
1. Your textbook discusses the benefits of cheaper imports on pages 171-173. Draw a graph that...
1. Your textbook discusses the benefits of cheaper imports on pages 171-173. Draw a graph that shows the effects on consumer and producer surplus (gain or loss) that result from a country importing a good. 2. Recently, China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 115 – 1/15Q     Supply: P = 55 + 1/15Q Where P is Yuan per bushel of...
) The home country is small and imports at the equilibrium world price of $3. The...
) The home country is small and imports at the equilibrium world price of $3. The home country has the following domestic demand and supply curves for cars: Demand: Qd=1000 – 100P Supply: QS=100P -200 a. (6 points) Draw two graphs, one for home country and one for the world market with the appropriate (labeled) curves. Under the scenario of free trade, calculate and label the following in the appropriate places: (1) home country no-trade (autarky) price; (2) import demand...
Question 2 Consider an economy that is closed and produces a good (Q 1 ). The...
Question 2 Consider an economy that is closed and produces a good (Q 1 ). The domestic supply and demand for the good is given below: Supply: Q 1 = -50 + 5P Demand: Q 1 = 400 – 10P a. Find the equilibrium price and quantity in the market and illustrate graphically. b. Suppose the world price in the market is $15 per unit and the country opens up to trade. Calculate the quantity of imports or exports in...
Consider the following trade situation: The U.S. demand for imports of tomatoes from Mexico is QD...
Consider the following trade situation: The U.S. demand for imports of tomatoes from Mexico is QD = 24 - P The supply of tomatoes to the United States from Mexico is QS = 6 + P The units are million boxes and U.S. dollars per box One U.S. dollar buys 10 Mexican pesos Draw a graph showing clearly the quantity of US imports of tomatoes from Mexico and their price in dollars. [Insert an image of your graph here] There...
Rotting teeth and fatty organs turn Australians sour on sugar Consumption has been flat-lining, and appetite...
Rotting teeth and fatty organs turn Australians sour on sugar Consumption has been flat-lining, and appetite for the sweet stuff probably won't grow much at all in the medium term as people shift to low sugar, diet and sugar- free options, said Mr Charles Clack, a Rabobank analyst in Sydney. Some state governments have been trying to discourage consumption by displaying graphic images of rotting teeth and fatty organs on buses and billboards. "Health is a large factor behind this...
2. A demand curve indicate a. the maximum willingness to pay for a given quantity b.the...
2. A demand curve indicate a. the maximum willingness to pay for a given quantity b.the consumer's gain from exchange c.the market price of a good or service d. the equilibrum quantity 3. trade permitts countries to a. consume more than they capable of producing b.produce based on their comparative advantage c.specialize more fully d.all of above 4. which of the following dose not impact how elastic supply is? a. whether the supply is local or global b.the share of...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market equilibrium price is $120. Jojo’s Tax Service has a daily, short-run total cost given by TC = 100 + 4Q2. Answer the following questions: How many tax returns should Jojo prepare each day if her goal is to maximize profits? How much will she earn in profit each day? A perfectly competitive...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market equilibrium price is $120. Jojo’s Tax Service has a daily, short-run total cost given by TC = 100 + 4Q2. Answer the following questions: How many tax returns should Jojo prepare each day if her goal is to maximize profits? How much will she earn in profit each day? A perfectly competitive...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT