2. Consider the country ABC. The demand function for product A is Q=500-4P, the supply function Q=100+4P.a) Draw the demand and supply curves. Find the equilibrium price and quantity for this market.b) If there is a price restriction of maximum $100 per unit of product A, what will be the equilibrium price andquantity for this market. What is the size of the shortage?c) The world price is $100. Should this country trade internationally? What will be the value of export/import? Findthe quantity of consumption and production, the domestic price, the consumer surplus and producer surplusbefore and after the trade. Compare the total surplus.d) Now suppose that the world price has decreased to $75. Should this country still trade? What will be the valueof export/import? Find the quantity of consumption and production, the domestic price, the consumer surplusand producer surplus before and after the world price change.e) Now suppose the government imposes a tax on producers of $30, so new supply function is Q=100+4(P-30).What is the size of the shortage/surplus, the deadweight loss, the tax revenue, the price, the quantity suppliedand demanded? Will the international trade change because of tax? What will be the value of export/import?

Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

2. Consider the country ABC. The demand function for product A is Q=500-4P, the supply function Q=100+4P. a) Draw the demand and supply curves. Find the equilibrium price and quantity for this market. b) If there is a price restriction of maximum $100 per unit of product A, what will be the equilibrium price and quantity for this market. What is the size of the shortage? c) The world price is $100. Should this country trade internationally? What will be the value of export/import? Find the quantity of consumption and production, the domestic price, the consumer surplus and producer surplus before and after the trade. Compare the total surplus.

2. Consider the country ABC. The demand function for product A is Q=500-4P, the supply function Q=100+4P. a) Draw the demand and supply curves. Find the equilibrium price and quantity for this market. b) If there is a price restriction of maximum $100 per unit of product A, what will be the equilibrium price and quantity for this market. What is the size of the shortage? c) The world price is $100. Should this country trade internationally? What will be the value of export/import? Find the quantity of consumption and production, the domestic price, the consumer surplus and producer surplus before and after the trade. Compare the total surplus.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 11SQ

See similar textbooks

Similar questions

Suppose the supply of a good by domestic firms is QSD = 10 + 2P and the supply by foreign firms is QSF = 10 + P. The domestic demand for the product is given by Qd = 30 − P. 1. In the absence of a quota, what is the total supply of the good? 2. What are the equilibrium price and quantity of the good? 3. Suppose a quota of 10 units is imposed. What is the total supply of the product? 4. Determine the equilibrium price in the domestic market under the quota of 10 units.
Suppose demand and supply are given by Qd = 60 - P and Qs = P - 20.a. What are the equilibrium quantity and price in this market?Equilibrium quantity: Equilibrium price: $b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market.Quantity demanded: Quantity supplied: Surplus: c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $32 is imposed in the market. Also, determine the full economic price paid by consumers.Quantity demanded: Quantity supplied: Shortage: Full economic price: $
Suppose the absolute values of the intercept and slope of the demand function are approximated to be ten (10) and three (3) respectively. If the absolute values of the intercept and slope of the supply function are assessed to be six (6), and five (5) respectively, calculate equilibrium price and quantity b. Suppose the intercept of the demand function increases by two (2), while the slope remains the same. If the supply function remains the same, estimate the new equilibrium price and quantity - Demonstrate graphically, the effect of the increase in the intercept of the demand function in (b) above on the equilibrium quantity and price. What generalization can you come up with from the resulting graphical analysis?
Suppose demand and supply are given by Qd = 60 − P and Qs = P − 20. a. What are the equilibrium quantity and price in this market? b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market. c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $32 is imposed in this market. Also, determine the full economic price paid by consumers.
Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows: Price $ Demand mln Supply mln 60 22 14 80 20 16 100 18 18 120 16 20 Calculate the price elasticity of demand when the price is $80 and when the price is $100. Calculate the price elasticity of supply when the price is $80 and when the price is $100. What are the equilibrium price and quantity? Suppose the government sets a price ceiling of $80. Will there be a shortage or a surplus, and if so, how large will it be?
Suppose that you decide to start a new business of making children’s ready-made garments. Make a (Hypothetical) linear supply schedule with 7 different price points and corresponding quantity supplied for your business. Make a graph showing equilibrium, shortage and surplus in the ready-made garments market. Give interpretation of this graph. Suppose cheap ready-made garments are imported from China. Draw a graph to show changes in equilibrium price and quantity for the Pakistani ready-made garments market. Give interpretation of this graph. Suppose that to boost the local industry, the Pakistani government gives subsidy on electricity prices. Draw a graph to show changes in equilibrium price and quantity. Give interpretation of this graph. Suppose that cheap cloth is imported from China for production of readymade garments and at the same time tourism in Pakistan increases bringing many more buyers of ready-made garments in the market. What will be impact on equilibrium price and…
The demand for petroleum is given by QD=85 − 0.4P where Q D is the quantity demanded in thousands of barrels per day and P is the price per barrel in dollars. The supply of petroleum is given by QS=55+0.6P. Calculate the equilibrium price and quantity in this market. 2. In the context of the problem in part (a), calculate the demand and supply for petroleum if the market price is $15 per barrel. What problem exists in the economy?
In a particular market, demand and supply curves are defined by the following equations QD = 300 – 20P,QS = -540 + 40P, where P is the price per unit in pounds and QD and QS are the quantity demanded and quantity supplied, respectively. A) What is the equilibrium price and quantity? B) If a maximum price is fixed at £12, what quantity will be traded?
Assume that the domestic supply curve for crude oil is S(P) = 5P and the domestic demand curve for crude oil is D(P)=500-20P. Further assume that domestic oil refiners face a perfectly elastic supply of oil imports at P = 16. a. Derive the domestic price, the quantity processed by domestic oil refiners, and the amount of imports at the competitive equilibrium. Show the results on a well-labeled graph. Now suppose that the domestic crude oil suppliers face a price ceiling of 8. Further suppose that for each two units of crude oil purchased, a domestic oil refiner gets one entitlement to domestic crude oil. Derive the marginal price of crude oil faced by domestic oil refiners. Add this to the graph in part (a). Derive the effect of regulation on the amount of crude oil processed by domestic oil refiners and the amount of imports. Show this on the graph from part (a). Derive the welfare effect of regulation on U.S. Shade in the welfare losses in the graph for part (a).
Assume that the demand and supply functions for each bottle of Beer ABC are. Quantity Demand= 1,000 – 400P Quantity Supply = 100P If a price ceiling is set at $2.50 for each bottle, what will be the impact on the market equilibrium? Any changes in quantity demand or quantity supplied?
In recent years, the government of Pakistan has established a support price for wheat of about $0.20 per kilogram of wheat. At this price, consumers are willing to purchase 10 billion kilograms of wheat per year, while Pakistani farmers are willing to grow and harvest 18 billion kilograms of wheat per year. The government purchases and stores all surplus wheat. Suppose that the market-clearing price of Pakistani wheat in the absence of price supports is equal to $0.10 per kilogram. At this price, the quantity of wheat demanded is 12 billion kilograms. Under the government wheat price-support program, how much more is spent each year on wheat harvested in Pakistan than otherwise would have been spent in an unregulated market for Pakistani wheat?
Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. Suppose demand and supply are given by Qd = 50 - P and Qs = 1.0P - 20. a. What are the equilibrium quantity and price in this market? Equilibrium quantity: 15 Equilibrium price: $ b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $42 is imposed in this market. Quantity demanded: Quantity supplied: Surplus: c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $28 is imposed in the market. Also, determine the full economic price paid by consumers. Quantity demanded: Quantity supplied: Shortage: Full economic price: $