The market for coffee (drink) in the country of Kopimana is perfectly competitive. Kopimana is a small exporter of coffee beans, where the crop is grown by many smal farm-holdings. Suppose that bad weather conditions destroyed a significant proportion of the coffee bean crop in Kopimana which reduced the income of the coffee bean farmers. To assist these farmers, the government of Kopimana decided to give them export subsidy such that the quantity of coffee beans exported by Kopimana would remain constant (unchanged). Based on the scenario described, answer the following questions: a) Since the quantity of coffee beans exported is unchanged, would the coffee bean producers be better-off, worse-off, or as well-off as before? Explain your analysis and illustrate using demand and supply curves. (Hint you may include a welfare table to support your analysis). b) Is there any deadweight loss in the market for coffee beans? Explain vour aner and illustrate using your diagram in part (a). (Hint you may refer to a welfare table to support your analysis). c) How would this affect the total revenue of coffee (drink) sellers? Explain your analysis and illustrate with an appropriate diagram/s.

The market for coffee (drink) in the country of Kopimana is perfectly competitive. Kopimana is a small exporter of coffee beans, where the crop is grown by many smal farm-holdings. Suppose that bad weather conditions destroyed a significant proportion of the coffee bean crop in Kopimana which reduced the income of the coffee bean farmers. To assist these farmers, the government of Kopimana decided to give them export subsidy such that the quantity of coffee beans exported by Kopimana would remain constant (unchanged). Based on the scenario described, answer the following questions: a) Since the quantity of coffee beans exported is unchanged, would the coffee bean producers be better-off, worse-off, or as well-off as before? Explain your analysis and illustrate using demand and supply curves. (Hint you may include a welfare table to support your analysis). b) Is there any deadweight loss in the market for coffee beans? Explain vour aner and illustrate using your diagram in part (a). (Hint you may refer to a welfare table to support your analysis). c) How would this affect the total revenue of coffee (drink) sellers? Explain your analysis and illustrate with an appropriate diagram/s.

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

Please discuss this statement: “a drought around the world raises the total revenue that farmers receive from the sale of grain, but a drought only in Queensland reduces the total revenue that Queensland farmers receive”. Explain the characteristics of demand and supply that determine changes in total revenue, considering different time periods.
Suppose a decrease in the world demand for desktop computers causes the price of desktop computers to fall from $600 to $500. Before the fall in demand, Juna, a local computer dealer in Japan, used to produce 9,000 desktop computers and exported 50 percent of it to other countries every week. However, after the fall in demand, Juna reduced its production to 8,000 units and exports only 40 percent of its total output.a. What are the changes in the quantity sold to domestic consumersb. What are the changes in the consumer surplus?c. Sketch a diagram to illustrate the changes for Juna.
2. Consider a competitive market for apartments in Bandung. What is the effect on the equilibrium price and quantity after the following (ceteris paribus)? In each case, explain your answer using the supply and demand curves. b. There is a $ 10 / month tax for apartment rentals.
Solve this
Refer to Example 2.10, which analyzes the effects of price controls on natural gas. Recall that the free-market wholesale price of natural gas (PG) is $6.40 per mcf (thousand cubic feet), the average price of crude oil (Po) is $50 per barrel, and production and consumption of gas (Q) are 23 Tcf (trillion cubic feet). Suppose the price elasticity of supply of natural gas is 0.20, the cross-price elasticity of supply of natural gas with respect to the price of oil is 0.12, the price elasticity of demand for natural gas is -0.60, and the cross-price elasticity of demand for natural gas with respect to the price of oil is 1.25. If so, then the linear supply curve for natural gas is OA. Q=1.346-1.638PG +0.055PO B. Q=12.056+0.368PG -0.495PO- O C. Q=16.296 +0.495P + 1.638Po O D. Q=10.562 +1.066PG-0.327Po O E. Q=15.648+0.719P+0.055Po
After the imposition of the price ceiling (and initial market equilibrium), two events took place in the cement market. First, ABC Limited obtained an efficient technology of production which influenced supply of ABC cement. This was followed by the second event (after a year) where the prices of raw materials for ABC cement production increased. An economist trained in the Havard University is of the view that, the final equilibrium price, after the effect of the second event has been felt, can only be lower than the initial equilibrium price (that is when the two events have not occurred). Another economist trained in the University of Ghana, however, on the other hand thinks the final equilibrium price can only be higher than the initial equilibrium price. By using appropriate diagram(s) briefly explain who is right. If none of the twoeconomists is right, what is your view?
Earlier this year it was reported that the supply of avocados（鳄梨） has fallen because of weather conditions. “…this time last year 360,000 trays were being produced per week, but that figure has fallen below 100,000 trays in recent weeks”. What information would you need about the market for avocadoes to assess whether growers of avocadoes as a group were hurt or helped by these poor weather conditions? Explain. If the demand for avocados is less price elastic than the supply of avocados, what short term impact would this have on the price of avocados (include a graph to help demonstrate your answer)
Consider the world market for wheat, in which Russia is a larger producer. Suppose there is a major failure in Russia's wheat crop due to a severe drought. Explain the likely effect on the equilibrium price and quantity in the world wheat market. Also, explain why Canadian wheat farmers certainly benefit from this drought
2. Consider a competitive market for apartments in Bandung. What is the effect on the equilibrium price and quantity after the following (ceteris paribus)? In each case, explain your answer using the supply and demand curves. a. Increased level of consumer income.
Suppose that the government has a goal to reduce the demand for cigarettes in support of a health program. Given this, the government decided to impose a per-unit tax of 40 centavos per pack that is levied on the sellers or placed on the sale of cigarettes by the government. This causes a shift of the market supply of cigarettes from S to S' as shown. Price ($ per pack) S 1.50 1.40 1.30 1.15 D₂ Quantity (Millions of pack) 3 4 5 Answer the following questions regarding this case. 1. Determine the deadweight loss to society caused by the imposition of the tax. (3 points) Interpret the result. (3 points) 1 2. What tax revenue is expected to be collected by the government? (4 points) 1.25 + 1 1 D₁
Hand written solutions are strictly prohibited
The market for all lawn care equipment shipped annually in the United States is approximately $16 billion, according to the Outdoor Power Equipment Institute, a trade organization based in Alexandria, Va. Most of it is bought by homeowners, and their choices are changing. For example, while gas-power mowers still dominate sales, “the speed at which battery-powered alternatives are gaining ground is notable,” said Grant Farnsworth, the president of the market research firm Farnsworth Group. Within the last four years, sales of battery push mowers have increased from 4 to 8 percent, he said. Use supply and demand graphs to analyze what will happen in the market for gas- powered lawn equipment and the market for battery/electric/robotic lawn equipment. Explain what shifts, and what happens to prices and quantities. How do elasticities of demand and elasticities of supply affect your answers to #1 What will happen to the productivity of lawn-care workers after the transition? At what…