Problem 1. In planet Krugman there are only two large countries, A and B. Demand (D) and supply (S) of a given good in each country are characterized by the following conditions: DA: P = 600 – 5Q SA: P = 400 – 5Q DB : P = 600 - 6Q SB: P = 300 + 2Q Assume all production is consumed. Pay also attention to the fact that the setup here involves just one good. a) Derive the autarky equilibrium prices and quantities in both country A (PA, QA), and B (PB. QB), separately. b) Derive the the free trade equilibrium price (Prr).

Problem 1. In planet Krugman there are only two large countries, A and B. Demand (D) and supply (S) of a given good in each country are characterized by the following conditions: DA: P = 600 – 5Q SA: P = 400 – 5Q DB : P = 600 - 6Q SB: P = 300 + 2Q Assume all production is consumed. Pay also attention to the fact that the setup here involves just one good. a) Derive the autarky equilibrium prices and quantities in both country A (PA, QA), and B (PB. QB), separately. b) Derive the the free trade equilibrium price (Prr).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

In 1983, the Reagan Administration introduced a new agricultural program called the Payment-in-Kind Program. To see how the program worked, let's consider the wheat market. a.) Suppose the demand function is QD = 28 2P and the supply function is Qs = 4 +4P, where P is the price of wheat in dollars per bushel, and is the quantity in billions of bushels. Find the free-market equilibrium price and quantity, and depict this market graphically. b.) Now suppose the government wants to lower the supply of wheat by 25% from the free-market equilibrium by paying farmers to withdraw land from production. However, the payment is mad in wheat rather than in dollars-hence the name of the program. The wheat comes from vast government reserves accumulated from previous price support programs. The amount of wheat paid i equal to the amount that could have been harvested on the land withdrawn from production (but is instead given to the farmers for free). Farmers are free to sell this wheat on the…
Statement 1 (S1): Complementarities increase the incentives for other agents to take similar actions. Statement 2 (S2): Complementarities occur when agents or sectors, their resources and capacities play respective assigned roles in a coordinated, well planned process of development. * True, True True, False False, True False, False S1: Multiple equilibria is a condition in which more than one equilibrium exists. S2: These equilibria sometimes may be ranked, in the sense that one is preferred over another, but the unaided market will not move the economy to the preferred outcome. * True, True True, False False, True False, False
Question 2: Suppose Qd= 100- 10P Qs = 10P a. Draw a graph using the supply and demand equation assuming no trade. Calculateequilibrium P, Q, consumer, producer and total surplus. b. Draw another graph assuming that trade is allowed. Calculate quantity domesticallyconsumed, domestically produced, imports, consumer surplus, producer surplus assumingworld price =$3. c. What happens to consumer surplus and producer surplus after trade? Does total surplusincrease or decrease after trade? Show your calculations. i need the the diagram
a) Consumption of certain public goods by individuals or firms reduce the quality of services available to others. Is it possible to achieve an equilibrium in such markets? Explain the Pareto efficiency conditions of such goods.
Consider the free market model involving the quantities of a product bought and sold, Q, at price P, as follows: Q = a1 + a2P, where a1 < 0, a2 > 0, and Q = b1 + b2P, where b1 > 0, b2 < 0. (i) Identify which of the above equations is the market demand, and which is the market supply, Curves, and explain the reasons for your choices. (ii) For the specific model: Q = -15P+2200 and Q = -800+10P, solve for the market equilibrium price (P*), and quantities (Q*) outcomes. (iii) Sketch a graphical representation of this market model. (Must label ALL intercepts and slopes clearly on your graphs).
Problem 3: Production-exchange economy Consider an economy with two consumers, A and B, two goods, X and Y, two factors of production, labor and capital, and two firms: firm X uses labor and capital to produce good X and firm Y uses labor and capital to produce good Y. Consumer A has no initial endowments of labor or capital but owns both of the firms. Consumer B has an initial endowment of labor Is =L>0 and an initial endowment of capital kg = K = L, but does not own any share of the firms. Both consumers i = A, B have preferences over consumption bundles can be represented by the Cobb-Douglas utility function where r; is the quantity of good X for consumer i, y; is the quantity of good Y for consumer i, and a e (0, 1) is a preference parameter. Firm X produces the output good X with a technology that can be de- scribed by the following production function: fx(lx, kx) = lx + kx, where lx is the quantity of labor and kx is the quantity of capital. Firm Y produces the output good Y with…
Consider a two-good two-consumer exchange economy where u1 = X1Y1 and u2 = X2Y2, endowment of person 1 = (3, 4) and endowment of person 2= (2, 2). Setting the price of good Y to one (Py = 1), what is the price of good X in the competitive equilibrium? 01 0 6/5 O 3/5 O 3/2
Consider a company that produces Good A and Good B. The equation of the PPF is 7x2 + 14y² = 16,800, where x is the quantity of Good A and y is the quantity of Good B. This year, the company produces 40 units of Good A and 20 units of Good B. Then, a new technology allows the company to reduce the quantity of resources required for Good B by 1.75 times. How much of Good B will the company produce at the same quantity of Good A? If necessary, round any intermediate calculations to one decimal place, and round your final answer to the nearest whole number.
The United States President decides to raise tariffs on all imports of goods and services from China by 30%. One of the motivations provided by the President is that China is not on track to meet the UN Paris Climate Accords to limit carbon emissions. Who is affected by this decision directly or indirectly? Multiple answers may be correct. Consumers in the United States Firms in China The Government in the USA Global (i.e. other than Chinese and American) consumers, firms, and governments The Chinese Government Consumers in China Firms in the USA
Question 2 of 12, Step 1 of 1 1/12 Correct Consider a company that produtes Good A and Good B. The equation of the PPF is 9x + 3y² 18,900, where is the quantity of Good A and y is the quantity of Good B. This year, the company produces 30 units of Good A and 60 units of Good B. Then, a new technology allows the company to reduce the quantity of resources required for Good Aby 1.5 times How much of Good A will the company produce at the same quantity of Good B? If necessary, round any intermediate calculations to one decimal place, and round your final answer to the nearest whole number. Answer units Keypad Keyboard Shortcuts
True or False: Suppose that the hypothetical country of Andesland has a chronic scarcity of quinoa, its staple grain. This implies that if Andesland has a market economy, quinoa will be available only for a price. True False True or False: Eventually, scarcity will be eradicated. True False
Which of the following statements is inaccurate? Multiple Choice There is substantial agreement about how and when markets fail. There is substantial agreement about whether government improves market outcomes. Voters are quick to blame government meddling for many economic woes. Ideally, the market mechanism will lead an economy to the optimal mix of output.