Price (Dollars per Bushel)950900850D8007507006506005505004504003503002502001501005000 3 6 91215S1821242427Bushels of Corn (Billions)The graph above shows hypothetical demand and supply functions for corn in the U.S. Thistime let's combine the previous two cases. Suppose that marginal cost of productionincreases by $150.00 per bushel due to the increase in oil prices and demand for cornincreases by 9.00 billion bushels due to the ethanol mandate.Calculate the following:The new equilibrium price of corn =dollars per bushelThe new equilibrium quantity of corn =billion bushels

Given:increase in MC by $150increase in demand by 9 billion The increase in the marginal cost will…

Answered: Price (Dollars per Bushel) 950 900 850…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose you discover a stream in northern Minnesota whose water has amazing powers for healing. You decide to sell bottles of the water. The market demand curve is linear and is given as follows: P = 30 - Q The marginal cost to produce this amazing water is $3 per bottle. a. In a competitive market, what price would this water sell for and how much would you sell? Show your calculations. P = _____, Q = ______ b. After taking this class, you realize that you have monopoly power in this market. To maximize your profits, what quantity would you sell and what would the price per bottle be? (Hint: what is marginal revenue for a monopolist?) Show your calculations. Pm = ____, Qm = ____ c. Now draw a graph to the right with price on the vertical axis and quantity on the horizontal axis and show the competitive market solution and the monopoly output and prices.
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Question 1: Hotelling’s Rule in a rapidly changing market Let’s assume that oil was not discovered until the year 1999. The New York Times writes that“a source of energy with potential disruptive effects on the world economy” is now ready forproduction, and “other countries are watching the developments closely”.Along with many other producers, you own a small oil well. The market is very competitive. Themarginal extraction cost is $10 per barrel. The interest rate is 5%. The annual demand for oil isQ = 90,000 – 2,000P where Q is in barrels per year and P is in dollars per barrel.Use your knowledge about Hotelling’s Rule to answer the following questions: Oil is trading for $25/bbl on Jan 1st, 1999. What do you expect the path of oil pricesand extraction quantities to be from 1999-2010 (assuming no shocks to the market)?A day later, on Jan 2nd, 1999, the Wall Street Journal opens with a story that there is now amore reliable reserves estimate. Total reserves are estimated at 760,000…
Sketch the microeconomics graph of the article, Industrial Demand for platinum driving significant supply shortfall

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