Question

Suppose the domestic supply (QS) and demand (QD) for scooters in China 1- Suppose the domestic...

Suppose the domestic supply (QS) and demand (QD) for scooters in China

1- Suppose the domestic supply (QS) and demand (QD) for scooters in China are given by the following set of equations:

QS = –25 + 10P

QD = 875 – 5P

If China can import scooters from the rest of the world at a per unit price of $50, how many scooters will be imported, produced and demanded in China?

a- Quantity Imported = 150, Quantity Produced = 475, Quantity Demanded = 625

b- Quantity Imported = 300, Quantity Produced = 625, Quantity Demanded = 925

c- Quantity Imported = 150, Quantity Produced = 625, Quantity Demanded = 475

d- Quantity Imported = 200, Quantity Produced = 525, Quantity Demanded = 725

2- Suppose the domestic supply (QS) and demand (QD) for scooters in China are given by the following set of equations:

QS = –25 + 10P

QD = 875 – 5P

The producer surplus will _____ by _____ when China engages in international trade and the international price for scooters settles at $50.

a- increase; $4,750

b- increase; $2,625

c- decrease; $7,500

d- decrease; $5,250

3-

Suppose the domestic supply (QS) and demand (QD) for scooters in China are given by the following set of equations:
QS = –25 + 10P
QD = 875 – 5P

In the absence of international trade in China, what will be the price and quantity of scooters in the China?

a-Price =$70, Quantity = 925

b- Price =$65, Quantity = 608

c- Price =$90, Quantity = 825

d- Price =$60, Quantity = 575

4-

Suppose the domestic supply (QS) and demand (QD) for scooters in China are given by the following set of equations:

QS = –25 + 10P

QD = 875 – 5P

The consumer surplus will _____ by _____ when China engages in international trade and the international price for scooters settles at $50.

a-increase; $6,000

b- increase; $2,625

c- decrease; $13,500

d-decrease; $7,150

5-The table given below shows the number of labor hours required to produce 1 gallon of wine and 1 pound of cheese in the United States and France. The opportunity cost of producing cheese in the United States is _____.

Labor hours to make In the United States In France
1 gallon of wine 4.00 1.00
1 pound of cheese 1.00 2.00

a-0.25 gallon of wine

b-4 gallons of wine

c-0.5 gallon of wine

d-1 gallon of wine

Homework Answers

Answer #1

QS = –25 + 10P

QD = 875 – 5P

For equilibrium quantity and price

875-5P=-25+10P

900=15P

P=900/15=60 AND Q=875-5(60) = 575

Y axis intercepts for QD and QS will be :

When QD = 0, P = 875/5 = 175

When QS= 0,P = 25/10 = 2.5

1) When P=50

QD=875-5(50) = 625

QS=-25+10(50) = 475

Imports = 625-475=150

option(C)

2) PS before trade = 0.5*575*(60-2.5) = 16531.25

PS after trade at price = 50 = 0.5*475*(50-2.5) = 11281.25

so, PS decreases by 16531.25-11281.25 = 5250

option(D)

3) option(D)

p=60, q=575

4) CS before trade = 0.5*575*(175-60) = 33062.5

CS after trade = 0.5*625*(175-50) = 39062.5

so, CS increases by 39062.5-33062.5 = 6000

option(A)'

5) OC of producing cheese in US = 4/1 = 4 gallons of wine

option(B)

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