How would the market for corn be affected (given the ethanol production subsidy) if oil prices were to rise? If the price of oil rises, then the demand for corn will decrease shifting the demand curve for corn to the left increasing the equilibrium price of corn.
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- The market for organic and locally sourced foods has skyrocketed over the past decade as consumers focus on improving their eating habits. However, severe droughts have caused organic food prices to rise significantly, forcing many consumers to shop at conventional supermarkets (which are increasingly adding organic food options) instead of organic food markets such as Whole Foods. In response, companies such as Whole Foods have begun offering more nonorganic options on their store shelves in order to provide their consumers with more affordable options. Based on this response, what did companies such as Whole Foods realize about the elasticity of demand for organic foods that caused them to lower their prices by changing the type of foods they sell?Read the following scenario. Corn is a very valuable product for which the U.S. government routinely offers subsidies. With no price support, the equilibrium price for corn is $300 per ton and the equilibrium quantity is 500 million tons per year. Suppose that the government agrees to pay farmers $350 for every ton of corn they produce and can't sell in the market. According to the farmer's market supply curve, 600 million tons per year is supplied at the price of $350 a ton, so production should increase to this amount. However, domestic users of corn cut back their purchases. Only 450 million tons a year is demanded at the price of $350 a ton, and purchases decrease to this amount. Farmers continue to produce 500 million tons of corn per year, so because they produce a greater quantity of corn than domestic buyers are willing to purchase, something must be done with the surplus. To make the price support work, the government decides to buy the surplus. Step 2 Use the scenario to…Suppose goods X and Y are complimentary products. Which of the following are correct with respect to the competitive market model of supply and demand? (check all that apply) an increase in the price of good Y will cause an increase in demand for good X and reduce the quantity demanded for good Y an increase in the price of good Y will cause a decrease in demand for good X and reduce the quantity demanded for good Y a decrease in the price of good X will increase the quantity demanded for good X and cause a decrease in demand for good Y a decrease in the price of good X will increase the quantity demanded for good X and cause an increase in demand for good Y
- The demand curve indicates the consumer behaviour while the supply curve indicates the willingness of suppliers to supply goods into the market. At the point of intersection, the two curves determine the equilibrium price of the commodity. State 6 conditions that can distort the market equilibriumCAC and Incentives for Truth Telling Before passing regulations on Coke ovens in the steel industry, the EPA estimated that the costs of controlling hazardous air pollutant emissions would be about $4 billion; four years later, that estimate had fallen to between $250 and $400 million. Similarly, projections for benzene emission control were on the order of $350,000 per plant; in actuality, chemical companies found they were able to use substitutes, which “virtually eliminated control costs.”2 We showed in this appendix that industry has an incentive to overstate costs if faced with marketable permit regulation. Does the same incentive hold for CAC regulation, which was used in Applications 15.0 and 15A.0? 1. Assume (1) that the EPA’s initial cost estimates provided earlier were based on industry sources and (2) that the EPA sought to regulate these pollutants at the efficient level.3 Use a diagram to provide a possible explanation for why the cost estimates were so…Suppose that the demand and supply curves for green peas are given by QD = 10 – 8P and QS = 2P, where P is the price per pound and Q is measured in thousands of pounds. If the price per pound of peas is $0.50, the market _____, so the price will _____. has excess demand of 3,000 pounds; rise has excess supply of 1,000 pounds; fall is in equilibrium; remain unchanged has excess demand of 5,000 pounds; rise
- You are the manager of a firm that specializes in small single-board widgets.Your goal is to determine the number of units (Z) that must be produced and sold by your firm each month in order to maximize profits. The total benefits (revenues) and costs to your firm of producing various quantities are given in the first three columns of the following table. Based on this scenario, complete the table and answer the accompanying questions: Control Variable (Z) Total Benefits B(Z) Total Cost C(Z) Net Benefits N(Z) Marginal Benefit MB(Z) Marginal Cost MC(Z) Marginal Net Benefit MNB(Z) 0 0 0 1 200 10 2 380 30 3 540 60 4 680 100 5 800 150 6 900 210 7 980 280 8 1040 360 9 1080 450 10 1100 550 A. Graph the total cost and total benefit curves.B. On another graph, plot the points for the marginal cost, marginal benefit, and marginal net benefit.C. Show how the two…You are the manager of a firm that specializes in small single-board widgets.Your goal is to determine the number of units (Z) that must be produced and sold by your firm each month in order to maximize profits. The total benefits (revenues) and costs to your firm of producing various quantities are given in the first three columns of the following table. Based on this scenario, complete the table and answer the accompanying questions: Control Variable (Z) Total Benefits B(Z) Total Cost C(Z) Net Benefits N(Z) Marginal Benefit MB(Z) Marginal Cost MC(Z) Marginal Net Benefit MNB(Z) 0 0 0 1 200 10 2 380 30 3 540 60 4 680 100 5 800 150 6 900 210 7 980 280 8 1040 360 9 1080 450 10 1100 550 a. How many units (Z) maximize net benefits?b. What is the relationship between marginal benefits and marginal costs at the level of Z you determined above?c. Graph the total…Discuss briefly the implication or significance of this EQUILIBRIUM POSITION or CONDITION? What does this mean in the real world of business where producers and buyers interact in the MARKET?
- As of April 2022, Apple's iOS and Android combined market share in mobile operating system is 99.6% worldwide. Explain how this could happened in a free market world using concepts you have learned in microeconomicsAgricultural economists are frequently accused of spending too little time in the real world. A preoccupation with abstract theoretical issues means that agricultural economists are sometimes unable or unwilling to look at the fundamental issues linked to the production and marketing of agricultural commodities. Do you agree or disagree?Suppose the government establishes a per-unit tax on new car sales. The tax funds will be directed to a new pollution abatement program. Consumers in this market watch the price of cars carefully, since a car purchase represents a significant percentage of consumers’ incomes. On the supply side of the market, the car manufacturers use highly specialized equipment and production processes to produce cars, and find it relatively difficult and costly to quickly move into the production of alternative consumer products. Based on this information above, determine which side of the market (demand or supply) is more price elastic. Make a sketch of the demand and supply in this market, in which the relative slopes reflect the relative elasticities you have noted. On your graph, show the impact of the tax on this market, with your graph showing clearly who will bear the greater percentage of a car tax burden, consumers or producers. (Assume that the sellers make the tax payments to the…