Let's consider the market for wheat Domestic supply: Qs=92+P Domestic demand: QD = 108P P is...
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Let's consider the market for wheat Domestic supply: Qs=92+P Domestic demand: QD = 108P P is price, QD is the quantity demanded and Qs is the quantity supplied. Calculate the autarky price: The world price is 3 Assume that a small country sets a quota equal to 6 bushels of wheat. calculate the quota price: calculate the quantity imported: What is the value of the ad valorem tariff that would result in the same level of imports % i. Let's now assume that, due to a prosperous year, the domestic demand for wheat increases to QD=110P with the ad valorem tariff just calculated above a. What will happen to quantity of bushels imported? Increases Calculate the imports: decreases b. What happens to the domestic price of wheat? Increases Calculate the price: decreases stays the same stays the same c. What happens to the domestic production of wheat? Increases Calculate the production: decreases stays the same d. What happens to the domestic consumption of wheat? Increases decreases Calculate the consumption:_ stays the same ii. Let's now assume the there is a quota equal to 6 bushels and that the domestic demand for wheat increases to Q=110P a. What will happen to quantity of bushels imported? Increases Calculate the imports: decreases b. What happens to the domestic price of wheat? Increases Calculate the price: decreases stays the same stays the same c. What happens to the domestic production of wheat? Increases Calculate the production: decreases stays the same d. What happens to the domestic consumption of wheat? Increases Calculate the consumption: decreases Show your results in the graph below stays the same 4 Let's consider the market for wheat Domestic supply: Qs=92+P Domestic demand: QD = 108P P is price, QD is the quantity demanded and Qs is the quantity supplied. Calculate the autarky price: The world price is 3 Assume that a small country sets a quota equal to 6 bushels of wheat. calculate the quota price: calculate the quantity imported: What is the value of the ad valorem tariff that would result in the same level of imports % i. Let's now assume that, due to a prosperous year, the domestic demand for wheat increases to QD=110P with the ad valorem tariff just calculated above a. What will happen to quantity of bushels imported? Increases Calculate the imports: decreases b. What happens to the domestic price of wheat? Increases Calculate the price: decreases stays the same stays the same c. What happens to the domestic production of wheat? Increases Calculate the production: decreases stays the same d. What happens to the domestic consumption of wheat? Increases decreases Calculate the consumption:_ stays the same ii. Let's now assume the there is a quota equal to 6 bushels and that the domestic demand for wheat increases to Q=110P a. What will happen to quantity of bushels imported? Increases Calculate the imports: decreases b. What happens to the domestic price of wheat? Increases Calculate the price: decreases stays the same stays the same c. What happens to the domestic production of wheat? Increases Calculate the production: decreases stays the same d. What happens to the domestic consumption of wheat? Increases Calculate the consumption: decreases Show your results in the graph below stays the same 4
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Managerial Economics and Strategy
ISBN: 9780134167879
2nd edition
Authors: Jeffrey M. Perloff, James A. Brander
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