Question 2 The market for leather shoes is served by both domestic (SA) and foreign (F) producers. The domestic producers have been complaining that foreign producers are dumping shoes onto the local market. As a result, parliament is very close to enacting a policy that would completely prohibit sales by foreign manufacturers of leather shoes in the South African market. The demand curve and relevant supply curves for the leather shoe market are as follows: QD 50,000 - 500P QSA= 6000+ 150P QF 2000 + 50P = where Q = thousands of pairs of shoes per year, P supply and QF = Foreign supply. price per pair, QSA= South African 2.1 Currently there are no restrictions covering leather shoes. Determine the equilibrium price and quantity. 2.2 Calculate the price and quantity that would prevail if the proposed policy is enacted 2.3 With reference to the answers obtained in 2.1 and 2.2, use a graphical illustration to analyse the economic welfare implications of the proposed policy.

EBK HEALTH ECONOMICS AND POLICY
7th Edition
ISBN:9781337668279
Author:Henderson
Publisher:Henderson
Chapter2: Using Economics To Study Health Issues
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Question 2
The market for leather shoes is served by both domestic (SA) and foreign (F) producers. The
domestic producers have been complaining that foreign producers are dumping shoes onto
the local market. As a result, parliament is very close to enacting a policy that would
completely prohibit sales by foreign manufacturers of leather shoes in the South African
market. The demand curve and relevant supply curves for the leather shoe market are as
follows:
QD 50,000 - 500P
QSA 6000 + 150P
QF = 2000 + 50P
where Q
=
thousands of pairs of shoes per year, P
=
price per pair, QSA = South African
supply and QF = Foreign supply.
2.1 Currently there are no restrictions covering leather shoes. Determine the equilibrium
price and quantity.
2.2 Calculate the price and quantity that would prevail if the proposed policy is enacted
With reference to the answers obtained in 2.1 and 2.2, use a graphical illustration to
analyse the economic welfare implications of the proposed policy.
2.3
Transcribed Image Text:Question 2 The market for leather shoes is served by both domestic (SA) and foreign (F) producers. The domestic producers have been complaining that foreign producers are dumping shoes onto the local market. As a result, parliament is very close to enacting a policy that would completely prohibit sales by foreign manufacturers of leather shoes in the South African market. The demand curve and relevant supply curves for the leather shoe market are as follows: QD 50,000 - 500P QSA 6000 + 150P QF = 2000 + 50P where Q = thousands of pairs of shoes per year, P = price per pair, QSA = South African supply and QF = Foreign supply. 2.1 Currently there are no restrictions covering leather shoes. Determine the equilibrium price and quantity. 2.2 Calculate the price and quantity that would prevail if the proposed policy is enacted With reference to the answers obtained in 2.1 and 2.2, use a graphical illustration to analyse the economic welfare implications of the proposed policy. 2.3
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