The demand and supply functions for corn are as follows. The quantity is in thousands of...

The demand and supply functions for corn are as follows. The quantity is in thousands of bushels and the price is in dollars per bushel.

QD = 1000 – 100 P

QS = - 245 + 90 P

A. What are the equilibrium price and equilibrium quantity in this market? Round your answers to 2 decimal places.

B. Graph this market and label all relevant points (equilibrium points, intercepts, axis labels, etc.).

C. Calculate the consumer surplus at the equilibrium price. Shade in the area associated with the consumer surplus in the graph in part B.

D. Assume that the government sets a price floor at $ 7.50 per bushel. Will this create a surplus of shortage in the market for corn? Calculate the surplus or shortage. Calculate the consumer surplus after the price floor.

E. Assume that the price of soybeans (a substitute in production for corn) increases. Use a supply and demand graph to analyze the impact on the price and quantity of corn sold in the corn market. Briefly describe your results.

Expert Solution

Rahul Sunny answered 2 years ago

Assume the following information for the demand and supply schedules for coffee. Price Quantity demanded (thousands...

Assume the following information for the demand and supply schedules for coffee. Price Quantity demanded (thousands of kg) Quantity supplied (thousands of kg) 6 3 9 5 4 7 4 5 5 3 6 3 2 7 1 (a) Graph the corresponding demand and supply curves and identify the equilibrium price and quantity of coffee? (2) (b) What do you mean by shortage and surplus? (2) (c) At the price of $6, would there be a shortage or a surplus...

Industry demand and supply functions for potatoes are as follows: QD = -1,450 – 25P...

Industry demand and supply functions for potatoes are as follows: QD = -1,450 – 25P + 12.5PW + 0.1Y QS = -100 + 75P – 25PW – 12.5PL + 10R Where: Q is number of potato bushels (in millions). P is the avg. wholesale price of potatoes (in $/bushel). PW is avg. wholesale price of wheat (in $/bushel), estimated to be $4. Y is annual income (GDP in $ billions); estimated to be $15 trillion. PL is avg....

1) The Demand and Supply Functions of a two-commodity market model are as follows: Qd1 =...

1) The Demand and Supply Functions of a two-commodity market model are as follows: Qd1 = 10 - 2P1 +P2 Qs1 = -2 + 3P1 Qd2 = 15 + P1 - P2 Qs2 = -1 + 2P2 a. Find Pi* and Qi* (i = 1, 2). (Use fractions rather than decimals). b. Based on this two-commodity model, what can you infer about the relationship between good 1 and good 2? c. What is the economic meaning of the coefficient of...

Use the following demand and supply functions:

Use the following demand and supply functions: Demand: Qd= 900 - 60P Supply: Qs= -200 + 50PIf the price is currently $11, there is asurplus of 110 units.shortage of 240 units.surplus of 350 units.shortage of 700 units.

Consider a market with demand and supply functions: Supply function: ? = 40? − 40 Demand...

Consider a market with demand and supply functions: Supply function: ? = 40? − 40 Demand function: ? = 200 − 20� a. Find deadweight loss of the price floor. [Hint: Deadweight loss is a region lost because of no trade.] Welfare effects of a tax Now, the government repeals the price floor and imposes a sales tax of $3 per good on buyers-side. b. Draw a new demand curve with old demand and supply curves. Find the new equilibrium...

Consider a small open economy. Suppose the domestic supply and demand for corn is

[Market Interventions and Government Policy]Consider a small open economy. Suppose the domestic supply and demand for corn isQs =10P and Qd =200−10P. SupposetheworldpriceisPw =$6.(a) Calculate the import quantity of corn, domestic consumer surplus andproducer surplus.(b) Now suppose a $2 tariff is imposed on imported corn. Calculate the new equilibrium price and quantity, domestic CS, domestic PS, government tax revenue, and DWL.(c) Show the CS, PS, government tax revenue, and DWL on a graph.(d) Ignore part (b), suppose the government impose...

The corn market is perfectly competitive, and the market supply and demand curves are given by...

The corn market is perfectly competitive, and the market supply and demand curves are given by the following equation: Qd =50,000,000 – 2,000,000 p Qs = 10,000,000 +5,500,000 p Where Qd and Qs are quantity demanded and quantity supplied measured in bushels, and P= price per bushel. 1) Determine consumer surplus at the equilibrium price and quantity.

Suppose the demand function for corn is Qd = 10-2p, and supply function is Qs =...

Suppose the demand function for corn is Qd = 10-2p, and supply function is Qs = 3p-5. The government is concerned that the market equilibrium price of corn is too low and would like to implement a price support policy to protect the farmers. By implementing the price support policy, the government sets a support price and purchases the extra supply at the support price and then gives it away to the consumers free. The government sets the support price...

The domestic supply and demand curves for washing machines are as follows: Supply: P= 2040+3Q Demand:...

The domestic supply and demand curves for washing machines are as follows: Supply: P= 2040+3Q Demand: P=4080-7Q where P is the price in dollars and the Q is the quantity in millions. The U.S. is a small producer in the world washing machine market. Where the current price (which will not be affected by anything we do) is $ 2,300. Congress is considering a tariff of $400. A. Calculate the domestic market for washing machines' price and quantity equilibrium. B....

Describe the difference between demand and quantity demanded? What is the difference between supply and quantity...

Describe the difference between demand and quantity demanded? What is the difference between supply and quantity supplied ? Describe the equilibrium.

Question