Although there is demand in the local market, much of the demand for Bangladeshi Jute output has come from other countries. We are told that total demand is Q = 3587 - 250P; where, domestic demand is Qad = 1625 - 108 P; export demand is Qe = 1962 - 142 P supply is Q = 1798 + 180 P. (Note: total demand, Q = Qdd + Qe) (a) What is the equilibrium market price of jute? Please give your answer in 2 decimal places. (b) Suppose, due to the recent pandemic, the export demand for jute falls by 57 percent. What happens to the price of jute in Bangladesh? Please give your answer in 2 decimal places. (c) Now suppose the BD government wants to buy enough jute to raise the price to $6.2 per unit. With this drop in export demand, how much jute would the government have to buy? Please give your answer in 2 decimal places. (d) How much would this cost the government? Please give your answer in 2 decimal places.
Although there is demand in the local market, much of the demand for Bangladeshi Jute output has come from other countries. We are told that total demand is Q = 3587 - 250P; where, domestic demand is Qad = 1625 - 108 P; export demand is Qe = 1962 - 142 P supply is Q = 1798 + 180 P. (Note: total demand, Q = Qdd + Qe) (a) What is the equilibrium market price of jute? Please give your answer in 2 decimal places. (b) Suppose, due to the recent pandemic, the export demand for jute falls by 57 percent. What happens to the price of jute in Bangladesh? Please give your answer in 2 decimal places. (c) Now suppose the BD government wants to buy enough jute to raise the price to $6.2 per unit. With this drop in export demand, how much jute would the government have to buy? Please give your answer in 2 decimal places. (d) How much would this cost the government? Please give your answer in 2 decimal places.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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