Find the market demand curve for peanuts
1. This set of questions is supposed as a overview of provide and demand shifts. For every Question Assignment assume the market is initially in equilibrium.
a. Think about the market for bicycles. Suppose that the Surgeon Normal publicizes that adults who bicycle for forty minutes a day have considerably higher well being outcomes than adults who don’t bicycle each day. What do you are expecting will occur to the equilibrium worth and amount in the market for bicycles? Clarify your reply.
b. Think about the market for bicycles. Suppose that the worth of gasoline doubles attributable to the imposition of upper excise taxes on gasoline consumption. At the similar time the Surgeon Normal publicizes that adults who bicycle for forty minutes a day have considerably higher well being outcomes than adults who don’t bicycle each day. What do you are expecting will occur to the equilibrium worth and amount in the market for bicycles? Clarify your reply.
c. Think about the market for juice. Suppose that oldsters notice that juice is stuffed with sugar and should contribute to the rising subject of weight problems in kids. At the similar time, suppose that there’s a main frost that damages a lot of the fruit crop for this 12 months. What do you are expecting will occur to the equilibrium worth and amount in the market for juice? Clarify your reply.
d. Think about the market for juice. Suppose that individuals’s revenue rise and the revenue elasticity of demand for juice is a adverse quantity. What do you are expecting will occur to the equilibrium worth and amount in the market for juice given this data? Clarify your reply.
e. Think about the market for juice. Suppose that individuals’s revenue rise and the revenue elasticity of demand for juice is a optimistic quantity. At the similar time new know-how is developed which permits producers to extend their manufacturing of juice by 25% with none change of their manufacturing prices. What do you are expecting will occur to the equilibrium worth and amount in the market for juice?Clarify your reply.
f. Think about the market for butter. You’re informed that the worth of margarine has decreased. You additionally know that the cross worth elasticity of demand between butter and margarine is a optimistic quantity. What do you are expecting will occur to the equilibrium worth and amount in the market for butter?Clarify your reply.
2. Suppose the market for apple pies in Fruitopia, a small closed financial system, is a aggressive market with the following demand and provide curves:
Home Demand: P = 10 – (1/200)Q
Home Provide: P = 5 + (1/200)Q
the place P is the worth per apple pie and Q is the amount of apple pies.
a. Given the above data, what’s the equilibrium worth and amount on this market?
b. Given the above data, what’s the worth of shopper surplus (CS) and producer surplus (PS)?
Suppose that the authorities of Fruitopia decides to open its apple pie market to commerce and the world worth of apple pies is $6 per apple pie.
c. Describe verbally the impact on Fruitopia of this determination. Be particular and thorough in your description.
d. When Fruitopia opens this market to commerce and the world worth of apple pies is $6 per apple pie, what occurs to the worth of CS, the worth of PS, the degree of home consumption of apple pies, and the degree of imports or exports?
e. Given your reply in (d), would you conclude that commerce is useful to Fruitopia? Be particular in your reply and clarify who advantages and who loses from this commerce and what the total affect is on this financial system of opening this market to commerce.
three. Suppose the small closed financial system of Weeland has the following home demand and home provide curves for melons:
Home Demand: P = 200 – 4Q
Home Provide: P = 40 + Q
the place P is the worth per field of melons and Q is the variety of bins of melons. Moreover, you recognize that the world worth of melons is $48 per field.
a. If Weeland opens this market to commerce, will Weeland import or export melons? Present a numerical worth of the degree of imports or exports and clarify in your reply why Weeland both imports or exports melons as soon as this market is open to commerce.
b. Suppose that Weeland opens this market to commerce, however at the similar time, imposes a quota on this market. The license holder income from this quota is the same as $100. Given this data, calculate the quota that has been imposed on this market. Present your work and the logic that lies behind your work. Really whenever you do that discover the two doable quota ranges that would have been imposed on this market with the end result that license holder income is the same as $100 attributable to the quota. After you do the work and present this work, fill in the following desk with the two doable quotas that may very well be imposed:
Attainable Options to this Question Assignment:
| Quota 1 = | Quota 2 = |
| Worth with Quota 1 = | Worth with Quota 2 = |
| Amount Demanded Domestically with Quota 1 = | Amount Demanded Domestically with Quota 2 = |
| Amount Equipped Domestically with Quota 1 = | Amount Equipped Domestically with Quota 2 = |
| Stage of imports with Quota 1 = | Stage of imports with Quota 2 = |
c. Given the doable quotas imposed in (b), what’s the worth of the deadweight loss attributable to the imposition of those doable quotas? Are the deadweight loss quantities the similar with both quota quantity? Present your work after which report your DWL findings in the following desk:
Attainable Quotas:
| Quota 1 | Quota 2 |
| DWL with “Quota 1″= | DWL with “Quota 2” = |
d. For certainly one of the quotas (you select which one you wish to use) describe verbally why there are two areas of deadweight loss and the motive why every of those areas is a deadweight loss when the quota is imposed on the market.
four. Think about the market for pencils in Sylvania, a small closed financial system. At the moment home demand and provide for pencils in Sylvania could be described by the following equations:
Home Demand: P =1200 – 2Q
Home Provide: P = 200 + 6Q
the place P is the worth per pencil and Q is the amount of bins of pencils. Moreover, you might be informed that the world worth per pencil is $440 (think about that is for a extremely massive field of pencils, if the worth appears excessive to you).
a. Find the equilibrium worth, equilibrium amount, shopper surplus, and producer surplus in the pencil market in Sylvania. Assume this market is closed to commerce.
b. Now, suppose that the authorities of Sylvania opens the pencil market to commerce. Find the worth of a field of pencils in Sylvania as soon as this determination is made. Then decide the variety of bins of pencils that shall be bought in Sylvania, the variety of bins of pencils that shall be produced domestically, the variety of bins of pencils that shall be exported, and the variety of bins of pencils that shall be imported. Decide the degree of shopper surplus in the pencil market in Sylvania as soon as the market is open to commerce. Decide the degree of producer surplus in the pencil market in Sylvania as soon as the market is open to commerce.
c. Suppose the authorities of Sylvania opens the pencil market to commerce. Moreover, the authorities decides to implement a tariff that raises the worth of a field of pencils in Sylvania by $60 above the world worth. Given this tariff, decide the tariff income the authorities of Sylvania will earn, the deadweight loss attributable to the tariff, the degree of shopper surplus with the tariff, and the degree of producer surplus with the tariff.
d. Given the selection of a closed market for pencils, an open market for pencils, or an open market with the described tariff in (c), which of those choices will producers of pencils in Sylvania want? Clarify your reply and be sure to current convincing proof to help your argument.
5. Suppose that there are three nations that commerce with each other: South, North, and East. The next equations characterize the market demand curve for peanuts in every of those three nations:
Market Demand for peanuts in South: P = 50 – Q
Market Demand for peanuts in North: P = 100 – (1/2)Q
Market Demand for peanuts in East: P = 50 – Q
the place P is the worth per unit of peanuts and Q is the variety of models of peanuts. Moreover you might be given the following details about the manufacturing of peanuts in these three nations:
Market Provide of peanuts in South: P = Q
Market Provide of peanuts in North: P = Q
Market Provide of peanuts in East: P = (1/2)Q
Suppose there aren’t any different nations that demand or provide peanuts on this drawback.
a. Given the above data, discover the market demand curve for peanuts if these three nations commerce with each other.
b. Given the above data, discover the market provide curve for peanuts if these three nations commerce with each other.
c. If these three nations produce peanuts and commerce with each other, what is going to the market equilibrium worth and amount of peanuts be? Fill in the following desk based mostly on these nations buying and selling with each other. [Hint: the numbers get a little messy, but you can do it!]
| South | North | East | |
| Amount of Peanuts Produced by every Nation | |||
| Amount of Peanuts Demanded by every Nation | |||
| Amount of Peanuts Exported by every Nation | |||
| Amount of Peanuts Imported by every Nation |
e. Take a look at your solutions in the desk: for those who sum the exports after which sum the imports and evaluate the two numbers, are they the similar? If not, you may have an error and it is advisable to return by the drawback to repair the error! On this instance, the sum of exports should stability in opposition to the sum of imports.
