Assume that supply for replacement mobile phone batteries in the Australian domestic market is given by the inverse-supply expression P = 9+0.00001Qs, while inverse demand is P = 19 -0.00001QD. The world price for batteries is $10. (a) Find the equilibrium price and quantity in the market for replacement mo- bile phone batteries if Australia does not engage in any international trade. Compute the consumer surplus, the producer surplus, and the total surplus in the market. (b) Now assume that Australia trades on the world market for batteries, exporting or importing batteries depending on the relation between the world and domestic prices. Find the price at which batteries will be sold in Australia, the quantity purchased, the quantity produced, and the quantity of imports or exports. Compute the consumer surplus, the producer surplus, and the total surplus in the market, as well as the gains from trade relative to part (a). (c) The Australian government imposes a $2 tariff on the import of batteries. Find the price at which batteries will be sold in Australia, the quantity purchased, the quantity produced, and the quantity of imports or exports. Compute the consumer surplus, the producer surplus, government revenue, and the total surplus in the market, as well as the deadweight loss relative to part (b).
Assume that supply for replacement mobile phone batteries in the Australian domestic market is given by the inverse-supply expression P = 9+0.00001Qs, while inverse demand is P = 19 -0.00001QD. The world price for batteries is $10. (a) Find the equilibrium price and quantity in the market for replacement mo- bile phone batteries if Australia does not engage in any international trade. Compute the consumer surplus, the producer surplus, and the total surplus in the market. (b) Now assume that Australia trades on the world market for batteries, exporting or importing batteries depending on the relation between the world and domestic prices. Find the price at which batteries will be sold in Australia, the quantity purchased, the quantity produced, and the quantity of imports or exports. Compute the consumer surplus, the producer surplus, and the total surplus in the market, as well as the gains from trade relative to part (a). (c) The Australian government imposes a $2 tariff on the import of batteries. Find the price at which batteries will be sold in Australia, the quantity purchased, the quantity produced, and the quantity of imports or exports. Compute the consumer surplus, the producer surplus, government revenue, and the total surplus in the market, as well as the deadweight loss relative to part (b).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:4. Assume that supply for replacement mobile phone batteries in the Australian domestic
market is given by the inverse-supply expression P = 9+0.000010s, while inverse demand
is P = 19 -0.00001QD. The world price for batteries is $10.
(a)
Find the equilibrium price and quantity in the market for replacement mo-
bile phone batteries if Australia does not engage in any international trade. Compute
the consumer surplus, the producer surplus, and the total surplus in the market.
(b)
Now assume that Australia trades on the world market for batteries,
exporting or importing batteries depending on the relation between the world and
domestic prices. Find the price at which batteries will be sold in Australia, the
quantity purchased, the quantity produced, and the quantity of imports or exports.
Compute the consumer surplus, the producer surplus, and the total surplus in the
market, as well as the gains from trade relative to part (a).
(c)
The Australian government imposes a $2 tariff on the import of batteries.
Find the price at which batteries will be sold in Australia, the quantity purchased, the
quantity produced, and the quantity of imports or exports. Compute the consumer
surplus, the producer surplus, government revenue, and the total surplus in the
market, as well as the deadweight loss relative to part (b).
(d)
The Australian government increases the battery tariff to $6. Find the
price at which batteries will be sold in Australia, the quantity purchased, the quantity
produced, and the quantity of imports or exports. Compute the consumer surplus,
the producer surplus, government revenue, and the total surplus in the market, as
well as the deadweight loss relative to part (b).
Expert Solution
Step by step
Solved in 9 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education