a) ** Let’s assume the domestic demand and supply functions for onions in Australia was given by: QD = 165 – 25P QS = 50P – 30 Sketch a basic diagram of the Australian market for onions, with calculated domestic equilibrium price and quantity, and label axis intercepts. b) ** Let’s say the onion growers’ association of Australia is concerned about the price of onions being unusually low, forcing farmers to move into other crops – at the detriment of future onion production. They lobby the government to guarantee a minimum price of $3.00 per kg. Show how this would affect the market for onions (i.e. conduct a full welfare analysis). c) *** What would happen if the government is forced to buy up any surplus crops that might arise from this? What would be the effect of this on the estimated welfare implications of this policy? Note: For this analysis, you would get closer to the true values by considering quantities to be in thousands of tonnes, or millions of kgs, you’d get something close to the real figures, as per my research. Just so you are aware of the scale of onion production in Australia. It’s big!
a) ** Let’s assume the domestic demand and supply functions for onions in Australia was given by: QD = 165 – 25P QS = 50P – 30 Sketch a basic diagram of the Australian market for onions, with calculated domestic equilibrium price and quantity, and label axis intercepts. b) ** Let’s say the onion growers’ association of Australia is concerned about the price of onions being unusually low, forcing farmers to move into other crops – at the detriment of future onion production. They lobby the government to guarantee a minimum price of $3.00 per kg. Show how this would affect the market for onions (i.e. conduct a full welfare analysis). c) *** What would happen if the government is forced to buy up any surplus crops that might arise from this? What would be the effect of this on the estimated welfare implications of this policy? Note: For this analysis, you would get closer to the true values by considering quantities to be in thousands of tonnes, or millions of kgs, you’d get something close to the real figures, as per my research. Just so you are aware of the scale of onion production in Australia. It’s big!
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
a) ** Let’s assume the domestic demand and supply functions for onions in Australia was
given by:
QD = 165 – 25P
QS = 50P – 30
Sketch a basic diagram of the Australian market for onions, with calculated domestic
equilibrium price and quantity, and label axis intercepts.
b) ** Let’s say the onion growers’ association of Australia is concerned about the price of
onions being unusually low, forcing farmers to move into other crops – at the detriment of
future onion production. They lobby the government to guarantee a minimum price of
$3.00 per kg. Show how this would affect the market for onions (i.e. conduct a full welfare
analysis).
c) *** What would happen if the government is forced to buy up any surplus crops that
might arise from this? What would be the effect of this on the estimated welfare
implications of this policy?
Note: For this analysis, you would get closer to the true values by considering quantities
to be in thousands of tonnes, or millions of kgs, you’d get something close to the real
figures, as per my research. Just so you are aware of the scale of onion production in
Australia. It’s big!
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