Suppose the demand and the supply for lumber (harvested wood processed in a sawmill) used for construction in Australia are given by QD =100 – 2P QS = 2P Assume also that the market is perfectly competitive. 2.1. Compute the equilibrium price P* and quantity Q*.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter8: Understanding Markets And Industry Changes

Section: Chapter Questions

Problem 5MC

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Recently, China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 11.5 – Q Supply: P = 5.5 + Q Price is in 10 Yuan (¥) per bushel of soybeans and the units for Quantity are 100 million bushels per year. This is to make graphing simpler. This does NOT mean that the price is 10 and quantity is 100. Rather it means that if the price was 40¥ and the quantity was 7,500,000,000 bushels, this would plot as 4 and 7.5 respectively. The world price for soybeans is ¥65/bushel (this would graph as 6.5). Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including: Domestic Demand curve (D), Domestic Supply curve (S), the World Price (WP), and the Price with tariffs (PT). Based on your graph for question 3, what amount of soybeans will China import from the US if there are no…
Recently, China placed tariffs on the importation of US soybeans. Assume that the domestic market for soybeans in China is described by the following equations: Demand: P = 11.5 – Q Supply: P = 5.5 + Q Price is in 10 Yuan (¥) per bushel of soybeans and the units for Quantity are 100 million bushels per year. This is to make graphing simpler. This does NOT mean that the price is 10 and quantity is 100. Rather it means that if the price was 40¥ and the quantity was 7,500,000,000 bushels, this would plot as 4 and 7.5 respectively. The world price for soybeans is ¥65/bushel (this would graph as 6.5). Graph the soybean market in China showing equilibrium both with no barriers to trade and with a ¥15/bushel tariff. Be sure to fully and clearly label the graph including: Domestic Demand curve (D), Domestic Supply curve (S), the World Price (WP), and the Price with tariffs (PT).
Suppose that the world price of oil is roughly $50.00 per barrel and that the world demand and total world supply of oil equal 34 billion barrels per year (bb/yr), with a competitive supply of 20 bb/yr and 14 bb/yr from OPEC. Statistical studies have shown that the long-run price elasticity f demand for oil is -0.40, and the long-run competitive price elasticity of supply is 0.40. Using this information, derive linear demand and competitive supply curves for oil. Let the demand curve be of the general form Q = a - bP and the competitive supply curve be of the general form Q = c+dP, where a, b, c, and d are constants. The equation for the long-run demand curve is O A. Q=47.50 -0.27P. O B. Q=13.50 -0.27P. OC. Q=47.50-P O D. Q=47.50+ 0.27P. O E. Q=13.50-47.50P. The equation for the long-run competitive supply curve is O A. Q=12.00 + 47.50P. OB. Q=12.00 -0.16P. OC. Q 8.00+ 0.16P. O D. Q=8.00+ 0.27P. O E. Q=12.00 +0.16P.
Consider the market for blueberries (a homogeneous product) in Madagascar, which is con- sidered a small country. Demand for a good is given by QD = 100– P. Domestic supply for the good is given by: Qs = P. Each country that exports blueberries has different marginal cost: $30 per crate in South Africa, $25 per crate in Peru, and $20 per crate in Chile. (a) Calculate the price, domestic output, consumption, imports, consumer surplus, and producer surplus associated with blueberries in the Madagascar free-trade equilibrium. (b) In the free-trade equilibrium, how many crates of blueberries are imported from each of the three source countries? (c) Calculate the price, domestic output, consumption, imports, consumer surplus, pro- ducer surplus, and government revenue associated with blueberries if Madagascar adopts a $15 MFN tariff on all WTO members. How many crates of blueberries are imported from each of the three source countries? (d) With the adoption of a Southern African Free Trade…
Suppose that the world demand and supply elasticities of crude oil are -0.906 and 0.515, respectively. The current equilibrium price is $30 per barrel and the equilibrium quantity is 16.88 billion barrels per year. Derive the linear demand and supply equations. Now suppose the world supply curve you derived above consists of competitive supply and OPEC supply. If the competitive supply equation is: SC = 7.78 + 0.29P, what must be OPEC's level of production in this equilibrium? Now suppose social and political unrest in some non-OPEC producing countries reduced the competitive supply by 30 percent, what happens to the world price of crude oil?
Suppose that the world price of oil is roughly $100.00 per barrel and that the world demand and total world supply of oil equal 34 billion barrels per year (bb/yr), with a competitive supply of 20 bb/yr and 14 bb/yr from OPEC. Statistical studies have shown that the short−run price elasticity of demand for oil is −0.05, and the short−run competitive price elasticity of supply is 0.10. Using this information, derive linear demand and competitive supply curves for oil. Let the demand curve be of the general form Q=a−bP and the competitive supply curve be of the general form Q=c+dP, where a, b, c, and d are constants. The equation for the short−run demand curve is? The equation for the short−run competitive supply curve is
Suppose you discover a stream in northern Minnesota whose water has amazing powers for healing. You decide to sell bottles of the water. The market demand curve is linear and is given as follows: P = 30 - Q The marginal cost to produce this amazing water is $3 per bottle. a. In a competitive market, what price would this water sell for and how much would you sell? Show your calculations. P = _____, Q = ______ b. After taking this class, you realize that you have monopoly power in this market. To maximize your profits, what quantity would you sell and what would the price per bottle be? (Hint: what is marginal revenue for a monopolist?) Show your calculations. Pm = ____, Qm = ____ c. Now draw a graph to the right with price on the vertical axis and quantity on the horizontal axis and show the competitive market solution and the monopoly output and prices.
Suppose the Canadian demand for and the Japanese supply of cars to Canada is shown in the table below (quantities in thousands). Quantity Supplied (before tariff) Quantity supplied (after tariff) Price ($) 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 Quantity Demanded 170 150 130 110 90 70 50 30 50 70 90 110 130 150 170 190 a) The present equilibrium price is $ and quantity is b) Suppose that the Canadian government imposes a $2,000 per car tariff on imported Japanese cars. Show the new supply in the last column above. thousand. thousand. c) The new equilibrium price is $ and quantity is d) The total revenue received by the government will be $ e) Assume, instead, that the government imposes an import quota of 90,000 cars. The new equilibrium price is $ quantity is thousand. f) Does the government now receive any revenue? No million. and
Dress Shoes Price P1 Q1 Quantity Reductions in cattle herds and restrictions on imports reduce the supply of leather in your country and increase its price. In the domestic market for dress shoes shown above, what happens as the increased price of leather raises the cost of producing shoes? Select one: a. D shifts to the right, so P rises and Q rises. Ob. S shifts to the right, so P falls and Q rises. c. D shifts to the left, so P falls and Q falls. O d. S shifts to the left, so P rises and Q falls.
The market for rice in an East Asian country has demand and supply given by QD = 28 – 4P and QS = -12 + 6P, where quantities denote millions of bushels per day. a. If the domestic market is perfectly competitive, find the equilibrium price and quantity of rice. Compute the triangular areas of consumer surplus and producer surplus. b. Now suppose that there are no trade barriers and the world price of rice is $3. Confirm that the country will import rice. Find QD, QS, and the level of imports, QD – QS. Show that the country is better off than in part (a), by again computing consumer surplus and producer surplus. c. The government authority believes strongly in
Question 11. Consider the market for flounders (a sort of fish). The demand curve in the northern part of the country is given by QN (P) = 2000-100P while that in the southern part is Qs(P) = 5000-500P. The supply curve for the entire country is Q(P) = 20P. What is the market demand for the entire country (i.e., northern and southern part combined) at a price of P=11 (round to the nearest integer if needed)? a) Q = 199 b) Q =10 c) Q =900 d) Q = 400
Q.1. Suppose that the demand for steel in Japan is given by the equation Q's = 1200 - 4Ps + PA+ PT, where QS is the quantity of steel purchased (millions of tons per year), PS is the price of steel (yen per ton), PA is the price of aluminum (yen per ton), and PT is the price of titanium (yen per ton). The supply curve for steel is given by Q$s = 4Ps. Similarly, the demand and supply curves for aluminum and for titanium are given by Q'A = 1200 – 4PA + Ps + PT (demand curve for aluminum), Q°A = 4PA (supply curve for aluminum), Qʻr= 1200 – 4PT + Ps+ PA (demand curve for titanium), and QST = 4PT (supply curve for aluminum). a) Find the equilibrium prices of steel, aluminum, and titanium in Japan. b) Suppose that a strike in the Japanese steel industry shifts the supply curve for steel to Q°s = Ps. What does this do to the prices of steel, aluminum, and titanium? c) Suppose that growth in the Japanese beer industry, a big buyer of aluminum cans, fuels an increase in the demand for aluminum…