Home’s demand curve for wheat is D= 80 – 2P and its supply curve is S=...

Home’s demand curve for wheat is D= 80 – 2P and its supply curve is S= 2P - 20. Foreign’s demand curve for wheat is D*= 80– 4P* and its supply curve is S*= 6P*- 30. You should very carefully draw each demand and supply curve, since your answers below must be reasonably close to correct. A small featureless graph will not be sufficient.

Now suppose Home imposes a quota of 20 on wheat imports. Quota rights are given to the Foreign government to give to its firms.

(c) What is the resulting equilibrium price of wheat in each country?

(d) Carefully graph the changes in consumer surplus, producer surplus, and government revenue in each country due to the quota.

(e) What tariff leads to the same outcome as (d)?

(f) Carefully graph the changes in consumer surplus, producer surplus, and government revenue in each country due to the tariff in (e)?

(g) How can the Home government change the way quota rights are assigned so that the outcome in (e) is the same as (f)?

Expert Solution

Rahul Sunny answered 8 months ago

Home’s demand curve for wheat is: D = 100 - 20P. Its supply curve is: S...

Home’s demand curve for wheat is: D = 100 - 20P. Its supply curve is: S = 20 + 20P. a) Derive and graph Home’s import demand schedule. What would be the price of wheat and quantity sold in Home in the absence of trade? Now add Foreign, which has a demand curve: D* = 80 -20P and a supply curve S* = 40 + 20P. b) Derive and graph Foreign’s export supply curve and find the price of wheat...

Home’s demand curve for wheat is D = 100-20P. Its supply curve is S = 20...

Home’s demand curve for wheat is D = 100-20P. Its supply curve is S = 20 + 20P. Suppose that Home is a small country. a. Graph the demand and supply curves. b. In the absence of trade, what would the price of wheat be in Home? c. The price of wheat in the world market is 1.5. What is the free-trade equilibrium price of wheat in Home? d. Determine the amount of domestic production, domestic consumption, and imports of...

Home’s demand curve for bananas is D = 100 – 2P and its supply curve for...

Home’s demand curve for bananas is D = 100 – 2P and its supply curve for bananas is S = 20 + 2P. Home is one of the largest banana importers in the world. When trade opens up, Home’s import demand curve is MD = 90 – 5P and it faces an export supply curve given by XS = 5P – 10. (6) A) With free trade, determine the equilibrium price and trade volume B)) Now Home imposes an ad...

Problem 1. ( JUST NEED PROBLEM 2 SOLVED) Home’s demand curve for wheat is D =...

Problem 1. ( JUST NEED PROBLEM 2 SOLVED) Home’s demand curve for wheat is D = 100-20P. Its supply curve is. S = 20 + 20P. Suppose that Home is a small country. a. Graph the demand and supply curves. In the absence of trade, what would the price of wheat be in Home? The price of wheat in the world market is 1.5. What is the free-trade equilibrium price of wheat in Home? Determine the amount of domestic production,...

Suppose that the demand curve for wheat is D ( p ) = 120 − 10...

Suppose that the demand curve for wheat is D ( p ) = 120 − 10 p , and the supply curve is S ( p ) = 10 p . The government imposes a price floor of $8 per unit. 1. Draw a clearly marked graph to illustrate the demand, supply, competitive equilibrium point (without government intervention), and the price floor. 2. Compute the equilibrium price and quantity after the price floor and interpret the results. 3. Explain who...

Suppose Home's demand curve for books is D=50-10P and its supply curve S=10+10P a. Derive Home's...

Suppose Home's demand curve for books is D=50-10P and its supply curve S=10+10P a. Derive Home's import demand schedule b. What would be the price of books in the absence of trade A Foreign country which has a demand curve D*=60-10P and a supply curve S*-20+10P c. Derive the Foreign's export supply curve d. Calculate the price of wheat what would prevail in Foreign in the absence of trade Suppose now both Home and Foreign trade with each other. There...

suppose the supply curve and demand curve for the market of shoes is as follows: Qd=30-2p ...

suppose the supply curve and demand curve for the market of shoes is as follows: Qd=30-2p Qs=15+p Find equilibrium P and Q suppose a $2 / unit tax is imposed on the seller. Find the new equilibrium Q, Pb and Ps. Now rework the problem with at $2 / unit subsidy (a subsidy is the opposite of tax)

Suppose the supply curve and demand curve for the market of shoes is as follows: Qd=30-2P...

Suppose the supply curve and demand curve for the market of shoes is as follows: Qd=30-2P Qs=15+P Suppose a $2 tax is imposed on the buyer. Find the new equilibrium Q, Pb and Ps. SHOW YOUR WORK. Suppose a $2 subsidy is imposed on the seller. Find the new equilibrium Q, Pb and Ps. Show your work.

Demand curve is given as D = 100 – 2P. If a monopoly company, whose cost...

Demand curve is given as D = 100 – 2P. If a monopoly company, whose cost function is C = 2Q, can do 1st degree price discrimination, what will be the market quantity and profit of the firm?

Suppose that the demand curve for wheat is Q= 120-10p and the supply curve is Q=10p...

Suppose that the demand curve for wheat is Q= 120-10p and the supply curve is Q=10p The government imposes a price ceiling p =$ 3 per unit. a. How do the equilibrium price and quantity change? (round quantities to the nearest integer and round prices to the nearest penny) The equilibrium quantity without the price ceiling is 60 and the price without the price ceiling is $6. The equilibrium quantity with the price ceiling is 30. b. What effect does...

Question