Recently, the spot market price of U.S. hot rolled steel plummeted to $400 per ton. Just one year ago, this same ton of steel cost $700. According to Metals Monitor, the drop in price was due to falling oil prices, along with a rise in cheap imports and excess capacity. These dramatic market changes have greatly impacted the supply of raw steel. Suppose that last year the supply for raw steel was QS, raw = 600 +4P, but this year it has shifted to QS raw- = 4,200 +4P. Assuming the market for raw steel is competitive and that the current worldwide demand for steel is Qara raw 9,000 -8P, compute the equilibrium price and quantity for the steel market one year ago, and the equilibrium price-quantity combination for the current steel market. Instructions: Enter your responses as whole numbers. Price one year ago: $ Quantity one year ago: Price for current market: $ Quantity for current market: Suppose the cost function of a representative steel producer is C(Q) = 1,200 + -15Q². How much raw steel does a representative firm produce when the market price is $700? How much raw steel does a representative firm produce when the market price is $400? How does the change in production by a representative firm compare to the change in production at the market level when price goes up? O Production by a representative firm decreases and production at the market level decreases. O Production by a representative firm increases while market-level production decreases due to exit. O Production by a representative firm increases and production at the market level increases. O Production by a representative firm decreases while market-level production increases due to entry.
Recently, the spot market price of U.S. hot rolled steel plummeted to $400 per ton. Just one year ago, this same ton of steel cost $700. According to Metals Monitor, the drop in price was due to falling oil prices, along with a rise in cheap imports and excess capacity. These dramatic market changes have greatly impacted the supply of raw steel. Suppose that last year the supply for raw steel was QS, raw = 600 +4P, but this year it has shifted to QS raw- = 4,200 +4P. Assuming the market for raw steel is competitive and that the current worldwide demand for steel is Qara raw 9,000 -8P, compute the equilibrium price and quantity for the steel market one year ago, and the equilibrium price-quantity combination for the current steel market. Instructions: Enter your responses as whole numbers. Price one year ago: $ Quantity one year ago: Price for current market: $ Quantity for current market: Suppose the cost function of a representative steel producer is C(Q) = 1,200 + -15Q². How much raw steel does a representative firm produce when the market price is $700? How much raw steel does a representative firm produce when the market price is $400? How does the change in production by a representative firm compare to the change in production at the market level when price goes up? O Production by a representative firm decreases and production at the market level decreases. O Production by a representative firm increases while market-level production decreases due to exit. O Production by a representative firm increases and production at the market level increases. O Production by a representative firm decreases while market-level production increases due to entry.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Recently, the spot market price of U.S. hot rolled steel plummeted to $400 per ton. Just one year ago, this same ton of steel cost $700.
According to Metals Monitor, the drop in price was due to falling oil prices, along with a rise in cheap imports and excess capacity.
These dramatic market changes have greatly impacted the supply of raw steel.
Suppose that last year the supply for raw steel was QS, raw = 600 +4P, but this year it has shifted to QS raw-
= 4,200 +4P.
Assuming the market for raw steel is competitive and that the current worldwide demand for steel is Qara
raw 9,000 -8P, compute the
equilibrium price and quantity for the steel market one year ago, and the equilibrium price-quantity combination for the current steel
market.
Instructions: Enter your responses as whole numbers.
Price one year ago: $
Quantity one year ago:
Price for current market: $
Quantity for current market:
Suppose the cost function of a representative steel producer is C(Q) = 1,200 +
-15Q².
How much raw steel does a representative firm produce when the market price is $700?
How much raw steel does a representative firm produce when the market price is $400?
How does the change in production by a representative firm compare to the change in production at the market level when price goes
up?
O Production by a representative firm decreases and production at the market level decreases.
O Production by a representative firm increases while market-level production decreases due to exit.
O Production by a representative firm increases and production at the market level increases.
O Production by a representative firm decreases while market-level production increases due to entry.
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