Steel is produced only in the US and the rest of the world (ROW). The inverse demand and supply in the US arep = 110 - Q8 and p = 20 + Qỗ,while in the ROW, they arep = 70 - Q and p = Qk.All quantities are in millions of tons and all prices are in dollars per ton. Since steel is produced more cheaply in the ROW, the US imports it from the ROW under international trade. Atany price, p, the imports of the US, QM. is the excess demand for steel given by the difference between the quantity demanded and the quantity supplied domestically in the US:QM = Q% - Qi. Similarly, the exports of the ROw, QF, is the excess supply of steel given by the difference between how much they produce and how much they demand:QE = Qk - Qg.(b) Find the consumer and producer surplus in the US at the price p".consumer surplus $millionproducer surplusmillion(c) The US government imposes a tax of $12 per unit on the ROw's exports. Find the new world equilibrium price, p**, and new world equilibrium quantity traded, Q**.p** = $per tonQ*" =million tonsWhat are the new quantities sold in each market, in the US and the ROW?| million tons|million tonsUSROW(d) What is the tax incidence on buyers and sellers in the US? What is the tax incidence on buyers and sellers in the ROW? Explain briefly.|per ton more than before. US sellers receive s| per ton less the tax of $12, i.e., $|per ton more|per ton less than before.US buyers pay s]per ton, $per ton, $than before. The ROW sellers receive $per ton, which is $The ROW buyers pay $|per ton, which is $per ton less than before.(e) Find the new consumer and producer surplus in the US at the price p** and the tax revenue earned by the US government.consumer surplus $millionproducer surplus$millionUS tax revenuemillion

Answer (b) Demand function in the US is Qd=110-p, and the supply function in the US is Qs=p-20.…

Steel is produced only in the US and the rest of the world (ROW). The inverse demand and supply in the US are p = 110 - Q8 and p= 20 + Qu, while in the ROW, they are p = 70 - Q and p = Q All quantities are in millions of tons and all prices are in dollars per ton. Since steel is produced more cheaply in the ROW, the US imports it from the ROW under international trade. At any price, p, the imports of the US, QM. is the excess demand for steel given by the difference between the quantity demanded and the quantity supplied domestically in the US: Qu = Q% - Qi. Similarly, the exports of the ROw, QE. is the excess supply of steel given by the difference between how much they produce and how much they demand: QE = Q2 - Qg.

Steel is produced only in the US and the rest of the world (ROW). The inverse demand and supply in the US are p = 110 - Q8 and p= 20 + Qu, while in the ROW, they are p = 70 - Q and p = Q All quantities are in millions of tons and all prices are in dollars per ton. Since steel is produced more cheaply in the ROW, the US imports it from the ROW under international trade. At any price, p, the imports of the US, QM. is the excess demand for steel given by the difference between the quantity demanded and the quantity supplied domestically in the US: Qu = Q% - Qi. Similarly, the exports of the ROw, QE. is the excess supply of steel given by the difference between how much they produce and how much they demand: QE = Q2 - Qg.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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