Question

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 this market.

c. After the country opens up to trade, calculate consumer surplus and producer surplus.

Identify these areas on your graph.

d. After trade, what is the increase in the value of total surplus?

Answer #1

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...

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...

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....

. A foreign country produces and subsidizes Good Z. The subsidy
causes the world price with the subsidy to be below the world price
without the subsidy. For the parts below, analyze what happens when
the foreign country stops its subsidy of Good Z. [You don’t need
graphs for this question.]
(a) Consider the effect on a small domestic country that
produces and exports Good Z. What happens to its consumer surplus,
producer surplus, and total surplus for Good Z?...

1. Consider the following demand and supply functions for a good
or service: Qd = 400 - 5P and Qs= 3P.
a) Graph the supply and demand functions in the typical manner
with price per unit (P) on the Y-axis and quantity on the X-axis.
Make sure to clearly mark X-intercept and Y-intercept on the
graph.
b) What is the slope of each line? Show your calculations.
c) What is the equilibrium price and quantity? Show your
calculations. Show the...

The domestic market supply function is QS = 25 + 5P,
and the domestic market demand function is
QD = 200 − 5P. The world
price is 20.
a) Carefully draw the graph for this market.
(Label the axes and curves.)
b) Is this country importing or exporting the commodity?
Calculate how much. ______________
c) Calculate the consumer surplus _________ and producer surplus
________ for this country.
Just need Part B and C. Thank you!

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 =...

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.

Consider the market for good Y when the supply and demand for
this good follow the equations P = Q and P = -Q + 3. After imposing
$2 price floor, what will be the producer surplus?
Group of answer choices
0.5
1
3
1.5

Suppose that domestic demand in the market for good X is given
by the equation
Qd = 60 - P. And that domestic supply in the market for good X
is given by the equation Qs = 2P
Suppose the world price is $10 and the country allows free
trade.
What is consumer surplus with free trade?
Suppose the government imposes a $5 tariff on imports.
What is the gain to suppliers from this tariff?
What is the gain to...

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