lumber market in Australia Suppose the demand and the supply for lumber (harvested wood processed in a sawmill) used for construction in Australia are given by QD =100 – 2P QS = 1 2 P Assume also that the market is perfectly competitive. 5. Now suppose a pandemic hits and the government introduces a Homebuilder Scheme, which provides up to a fixed amount of money towards building a home or renovating an existing one. As a result, there is an increase in construction projects. Use a demand and supply graph to explain how this affects the equilibrium price and quantity in the market. 6. A number of factors now affect the market at once. First, the price of oil rises, increasing transportation costs. Second, landowners who supply
lumber market in Australia Suppose the demand and the supply for lumber (harvested wood processed in a sawmill) used for construction in Australia are given by QD =100 – 2P QS = 1 2 P Assume also that the market is
5. Now suppose a pandemic hits and the government introduces a Homebuilder Scheme, which provides up to a fixed amount of money towards building a home or renovating an existing one. As a result, there is an increase in construction projects. Use a demand and supply graph to explain how this affects the
6. A number of factors now affect the market at once. First, the price of oil rises, increasing transportation costs. Second, landowners who supply logs to sawmills decide to hold off on cutting trees in response to the market conditions described in 5. Use a demand and supply graph to explain how these two events affect the equilibrium price and quantity. Show changes relative to the equilibrium you illustrated in 5.
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10. Calculate the
11. Who benefits more from the subsidy, consumers or producers? Why?
by Bartleby ExpertSuppose the demand and the supply for lumber (harvested wood processed in a sawmill) used for construction in Australia are given by
QD =100 – 2P
QS = 1/2P
Assume also that the market is
7. Steel is a substitute for lumber in construction. Now suppose the price for steel rises. Use a graph of
8. back to the orginial graph once more, the government introduces a subsidy of s=5 per unit of lumber transacted in the market. Calculate the new equilibrium quantity and the price paid by consumers and received by producers.
9. Given the subsidy in 8, calculate and illustrate in a graph the
10. Calculate the
11. Who benefits more from the subsidy, consumers or producers? Why?
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