Question

Consider a small open economy of Guyana that faces the following domestic demand and supply for...

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 quota of 10 metric tons and gives away the quota licenses to the domestic producers of sugar.

a) What will the local price now be?

b) Given the price you calculated above, what is the quantity domestic consumers will be willing to buy? What is the quantity domestic producers will be willing to supply?

c) What is the value of the producer surplus?

d) What is the value of the government surplus?

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
Consider a small open economy of Jamaica whose domestic supply and demand of rumis as follows....
Consider a small open economy of Jamaica whose domestic supply and demand of rumis as follows. Demand: Q= 500−P Supply: Q= 2.5P−25 where quantity is in thousands of crates and price is in Jamaican dollars (J$). ii) Now suppose the world price of rum isJ$ 100. In an attempt to protect local rum producers, the government imposes a quota of 105 thousand crates on imports of rum. a) What will be the local price of a crate of rum, given...
Aoslia is a small country that takes the world price of corn as given. Its domestic...
Aoslia is a small country that takes the world price of corn as given. Its domestic supply and demand for corn is given by the following: D = 45 - 3P and S = 3P - 9. Suppose the Aoslian government applies an import quota that limits imports to 12 bushels. Assume the world price is $5. A) Determine the quantity demanded, quantity supplied, and new domestic price with the quota B) Calculate the quota rent C) Assuming that the...
4. Suppose the domestic supply and demand curves for petroleum in the U.S. are, Qs =...
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.
1. Consider a small open economy. Suppose the market for corn in the Banana Republic is...
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...
The demand and supply for a good are respectively P = 20 – QD and P...
The demand and supply for a good are respectively P = 20 – QD and P = - 4 + 2QS. 17) Determine the equilibrium quantity in the absence of any intervention by the government. 18) Determine the equilibrium price in the absence of any intervention by the government. Suppose the government imposes a quota equal to Q = 6. 19) Determine the maximum price consumers are willing to pay to buy the good when Q = 6. 20) Determine...
Domestic demand for a good is QD = 3000 - 25P. The domestic supply of the...
Domestic demand for a good is QD = 3000 - 25P. The domestic supply of the good is QS = 20P. Foreign producers can supply any quantity at a price (P) of $30. Is there a shortage or a surplus? What is the quantity of shortage or surplus?
Demand for sugar: Q = 18-P Supply of sugar: Q = 4+P Quantities are in million...
Demand for sugar: Q = 18-P Supply of sugar: Q = 4+P Quantities are in million hundredweight (cwt.) and the price is in dollars per cwt. 1. What is the equilibrium price and quantity of sugar in the absence of any agricultural policy? 2. If the government establishes a support price for sugar of $9 per cwt. (hundred pounds) and is willing to purchase any surplus sugar at that price, indicate on your graph the quantity supplied, quantity demanded, and...
Consider the daily market for bananas in Australia: Demand: P = 100 – 5Qd Supply: P...
Consider the daily market for bananas in Australia: Demand: P = 100 – 5Qd Supply: P = 10 + 10Qs where quantity (Q) is measured in 1000 tons (for example, Q = 2 means Q = 2K tons, where K stands for 1000) and price (P) is price per ton, and the superscripts d and s stand for ‘demand’ and ‘supply’ respectively. The Equilibrium Price =     _____________ The Equilibrium Quantity = ___________ In the problem above, Australian government does...
Suppose the world price for shoes is $32 per pair. Domestic demand and domestic supply are...
Suppose the world price for shoes is $32 per pair. Domestic demand and domestic supply are determined by the following equations: Domestic Demand: p = 120 - 2q Domestic Supply: p = 20 + 3q where p and q represent price and quantity, respectively 9. What is the net loss to the domestic economy if the above import quota of 30 pairs of shoes is implemented under the arrangement of Voluntary Export Restraint (VER)? A) $60 B) $120 C) $360...
2Q Consider a closed economy. Let the demand curve be P = 80 - Q and...
2Q Consider a closed economy. Let the demand curve be P = 80 - Q and the supply curve be P = 20 + 2Q . a) Calculate the equilibrium price and equilibrium quantity. b) Suppose the government sets a price ceiling of $55, what is the amount of excess demand or excess supply? (Write down excess demand or excess supply). c) Suppose the government sets a production quota of 16 units, calculate the equilibrium price and equilibrium quantity. 2....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT