Suppose the current equilibrium point for the market of good for a closed economy is (200,...

Suppose the current equilibrium point for the market of good for a closed economy is (200, $100). Also we know the ɛ = -2 and n = 1.5 at the equilibrium point. Suppose the economy is now open to trade. Let $110 Pw = $110 .

a) What is the domestic price?

b) What is the size of the export?

Solutions

Expert Solution

a) domestic Price = $110

b) size of export = 70

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose the current equilibrium point for the market of good X is (200, $100). Also we...

Suppose the current equilibrium point for the market of good X is (200, $100). Also we know that ɛ = -2 . Suppose the government grants an unit subsidy of $3 on good X, calculate the cost to the government under each of the following situations. i) The supply curve for good X is horizontal. ii) The supply curve for good X is vertical.

5. Suppose the current equilibrium point for the market of good X is (200, $100). Also...

5. Suppose the current equilibrium point for the market of good X is (200, $100). Also we know that ɛ = -2 and n = 1.5 . Suppose the government imposes an unit tax of $3/unit of the good. Calculate the size of government revenue. [You are NOT allowed to use the short cut formula.]

In an imaginary closed economy, the market for loanable funds is in equilibrium in which the...

In an imaginary closed economy, the market for loanable funds is in equilibrium in which the government is running a balanced budget. In equilibrium, GDP, consumption expenditure and government expenditure are $4,000 million, $2,500 million and $1,000 million, respectively. a. Calculate private saving, public saving, taxes and investment. b. In order to finance for additional expenditures in the future, suppose the government is running a budget deficit in which it raises fund through selling government bonds in the open market....

Suppose a closed economy has an aggregate consumption function given by C = 200 + 0.50Yd and generates $2400 output and income in equilibrium

2Suppose a closed economy has an aggregate consumption function given by C = 200 + 0.50Yd and generates $2400 output and income in equilibrium. Suppose also that the government collects a lump-sum tax of 100.How much will the private sector be saving total in equilibrium?3Suppose a closed economy generates $2500 output and income in equilibrium. Suppose also that the government spends 350 and imposes a lump-sum tax of 100.By how much is the government in deficit?

consider a closed economy. suppose the market for corn in banana republic is competitive. the domestic...

consider a closed economy. suppose the market for corn in banana republic is competitive. the domestic market demand function for corn is Qd=18-P and the domestic market supply function is Qs=P-2, both measured in billions of bushels per year. in order to help the corn industry, the government initiated a price support program by purchasing 2 billion bushels corn in the market a)Draw a graph to show the market equilibrium price and quantity. Identify the area of dead weight loss...

Suppose that the market for good X is free and competitive, where the equilibrium price and...

Suppose that the market for good X is free and competitive, where the equilibrium price and quantity, are $30 per ton and 10 million tons per year, respectively. The producers of good X complain to the government that the current market price is too low to provide them with sufficient income, and they want the government to set a price floor of $40 per ton and to purchase all resulting surplus in order to guarantee that the price support is...

5) Consider a situation where the market equilibrium would result in 200 units of some good...

5) Consider a situation where the market equilibrium would result in 200 units of some good being produced (that is – at Q = 200 units is where the supply and demand curves intersect.) a) Explain why a deadweight loss would arise if production were to stop at only 150 units being produced. b.)Explain why a deadweight loss would arise if production were to total 250 units.

In a closed economy with no government, the equilibrium level of income is £22 billion, the...

In a closed economy with no government, the equilibrium level of income is £22 billion, the full employment level of income is £25 billion. To reach full employment would require an injection of £1 billion. Explain how could the economy reach full employment equilibrium level of income £25 billion?

Suppose that market for good X is free and competitive, where the equilibrium price and quantity...

Suppose that market for good X is free and competitive, where the equilibrium price and quantity are $30 per tops and 10 million tons per year respectively. The producers of good X complain to the government that the current market price is too low to provide them with sufficient income, and they want the government to set a price floor of $40 per ton and to purchase all resulting surplus in order to guarantee that the price support is maintained....

Suppose that market for good X is free and competitive, where the equilibrium price and quantity...

Subjects