3. At a price of $20 per tonne, the supply of wheat in Canada is 25...

3. At a price of $20 per tonne, the supply of wheat in Canada is 25 million tonnes and the demand is 30 million tonnes. When the price increases to $25 per tonne, the supply increases to 30 million tonnes and the demand decreases to 20 million tonnes. Assume both the demand and supply curves are linear.

a. What is the equation for the demand curve for wheat?

b. What is the equation of the supply curve for wheat?

c. Using these equations, what is the equilibrium price and quantity of wheat? Draw and label these points on a graph.

d. If the government imposes a tax of $2 per unit, calculate the price buyers will pay, price sellers receive. Also, show this on the graph above.

e. What is the deadweight loss created by the tax?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose the equilibrium price of gasoline is $3 per gallon. a. Using the demand and supply...

Suppose the equilibrium price of gasoline is $3 per gallon. a. Using the demand and supply graph, draw this equilibrium in the space below. Make this graph large, it will be used for future questions. b. Now suppose the government imposes a binding price floor on this market. Identify a value for this price floor that would be binding and show it on the graph. Graphically show whether excess demand or excess supply would result. c. With the price floors,...

Price: $25 $18 $20 $20 $30 $22 $26 What is the mean price for an adult...

Price: $25 $18 $20 $20 $30 $22 $26 What is the mean price for an adult haircut? What is the median price for an adult haircuit? What is the mode price for an adult haircut? Compute the 60th percentile. What does this value mean? Compute the second quartile. What does this value mean? What is the variance for the prices? What is the standard deviation?

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...

Declared a $6 per share cash dividend for common shareholders. The record date is 3-25-20 and...

Declared a $6 per share cash dividend for common shareholders. The record date is 3-25-20 and the payment date is 4-10-20. Journalise this transaction

Farmer Jones is producing wheat and must accept the market price of $7.00 per bushel. At...

Farmer Jones is producing wheat and must accept the market price of $7.00 per bushel. At this time, her average total costs and her marginal costs both equal $9.50 per bushel. Her minimum average variable costs are $7.50 per bushel. In order to maximize profits or minimize losses in the short run, farmer Jones should A. increase output. B. continue producing, but reduce output. C. increase selling price. D. produce zero output and shut down.

Horatio consumes 20 fries and 12 shakes per week. The price of fries is $3 each...

Horatio consumes 20 fries and 12 shakes per week. The price of fries is $3 each and shakes are $5 each. 2.1 What is the amount of income allocated to shakes and fries consumption? 2.2 What is the price ratio (the price of shakes relative to the price of fries)? 2.3 If Horatio maximizes utility, what is the ratio of the marginal utility of shakes to the marginal utility of fries? (Hint: Start with the rule that you know and...

Chapter 5 (#4) Consider the following demand schedule: Price Quantity Demanded Elasticity Coefficient $25 20 -3...

Chapter 5 (#4) Consider the following demand schedule: Price Quantity Demanded Elasticity Coefficient $25 20 -3 20 40 -1.4 15 60 -0.714 10 80 -0.33 5 100 What is the price elasticity of demand between? See attached P = $25 and P = $20? P= $20 and P = $15? P = $15 and P = $10? P = $10 and P = $5?

KEY facts : 100 retail price-per unit- 50 sell price to the retailer -per unit- 25...

KEY facts : 100 retail price-per unit- 50 sell price to the retailer -per unit- 25 cost to manufacturer - per unit- 12 million IMC advertising Budget Question1- What is the profit per unit for the manufacturer? question 2- what is the profit margin % per unit for the manufacturer? Question 3- where are your profits $'s at the end of year 1? a) estimate that you will sell 533,000 units in 2019 as result of your IMC campaign b)Mutiply...

The Canadian government maintains price controls on many agricultural goods, including wheat and corn, two grain products produced by farmers in Canada

The Canadian government maintains price controls on many agricultural goods, including wheat and corn, two grain products produced by farmers in Canada. The resulting prices are higher than what would prevail in a free market. a) Explain clearly why we have surpluses in these goods. b) Suppose the government eliminated price supports for corn, but maintained them for wheat. What would happen to the prices of these goods, the quantities consumed by consumers of each good, and the size of...

The price per share of stock for a sample of 25 companies was recorded at the...

The price per share of stock for a sample of 25 companies was recorded at the beginning of 2012 and then again at the end of the 1st quarter of 2012. How stocks perform during the 1st quarter is an indicator of what is ahead for the stock market and the economy. The sample data are provided below. Construct a spreadsheet to answer the following questions. End of 1st Quarter Beginning of Year 26.83 18.71 40.41 34.86 54.80 44.18 59.52...

Subjects