Refer to Figure 3.6, page 55. Assume that the graph depicts the U.S. domestic market for corn. How many bushels of corn, if any, will the United States export or import at a world price of $1, $2, $3, $4, and $5? Use this information to construct the U.S. export supply curve and import demand curve for corn. Suppose the only other corn-producing nation is France, where the domestic price is $4. Which country will export corn; which will import it? FIGURE 3.6 Equilibrium price and quantity. The intersection of the downsloping demand curve D and the upsloping supply curve S indicates the equilibriumprice and quantity, here $3 and 7000 bushels of corn. The shortages of corn at below-equilibrium prices (for example, 7000 bushels at $2) drive up price. The higher pricesincrease the quantity supplied and reduce the quantity demanded until equilibrium is achieved. The surpluses caused by above-equilibrium prices (for example, 6000 bushelsat $4) push price down. As price drops, the quantity demanded rises and the quantity supplied falls until equilibrium is established. At the equilibrium price and quantity,there are neither shortages nor surpluses of corn.$6Market Supply of and Demand for Corn(1)(3)TotalSTotal(2)Price(4)Surplus (+)56000-bushelQuantitySuppliedper WeekQuantitysurplusperDemandedorBushelper WeekShortage (-)*12,000$52,000+10,000 V10,00044,000+6,0007,0007,0004,000211,000-7,0001,00016,000- 15,000 ↑7000-bushel*Arrows indicate the effect on price.shortage246781012141618Bushels of corn (thousands per week)Price (per bushel)

International trade or the export and import of goods and services are also dependent on the demand…

Answered: FIGURE 3.6 Equilibrium price and…

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 9PA

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Refer to Figure 3.6, page 55. Assume that the graph depicts the U.S. domestic market for corn. How many bushels of corn, if any, will the United States export or import at a world price of $1, $2, $3, $4, and $5? Use this information to construct the U.S. export supply curve and import demand curve for corn. Suppose the only other corn-producing nation is France, where the domestic price is $4. Which country will export corn; which will import it?

FIGURE 3.6 Equilibrium price and quantity. The intersection of the downsloping demand curve D and the upsloping supply curve S indicates the equilibrium
price and quantity, here $3 and 7000 bushels of corn. The shortages of corn at below-equilibrium prices (for example, 7000 bushels at $2) drive up price. The higher prices
increase the quantity supplied and reduce the quantity demanded until equilibrium is achieved. The surpluses caused by above-equilibrium prices (for example, 6000 bushels
at $4) push price down. As price drops, the quantity demanded rises and the quantity supplied falls until equilibrium is established. At the equilibrium price and quantity,
there are neither shortages nor surpluses of corn.
$6
Market Supply of and Demand for Corn
(1)
(3)
Total
S
Total
(2)
Price
(4)
Surplus (+)
5
6000-bushel
Quantity
Supplied
per Week
Quantity
surplus
per
Demanded
or
Bushel
per Week
Shortage (-)*
12,000
$5
2,000
+10,000 V
10,000
4
4,000
+6,000
7,000
7,000
4,000
2
11,000
-7,000
1,000
16,000
- 15,000 ↑
7000-bushel
*Arrows indicate the effect on price.
shortage
2
4
6
7
8
10
12
14
16
18
Bushels of corn (thousands per week)
Price (per bushel)

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