Currently there are no restrictions covering leather shoes. Determine the equilibrium price and quantity. Calculate the price and quantity that would prevail if the proposed policy is enacted.With reference to the answers obtained in 1 and 2, use a graphical illustration to analyse the economic welfare implications of the proposed policy. The market for leather shoes is served by both domestic (SA) and foreign (F) producers. Thedomestic producers have been complaining that foreign producers are dumping shoes ontothe local market. As a result, parliament is very close to enacting a policy that wouldcompletely prohibit sales by foreign manufacturers of leather shoes in the South Africanmarket. The demand curve and relevant supply curves for the leather shoe market are asfollows:IQD = 50,000 - 500PQSA= 6000 + 150PQF= 2000+ 50Pwhere Q = thousands of pairs of shoes per year, P = price per pair, QSA= South Africansupply and QF = Foreign supply.

Equilibrium is determined at a point where both quantity demanded and quantity supplied becomes…

Answered: The market for leather shoes is served…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Currently there are no restrictions covering leather shoes. Determine the equilibrium price and quantity.
Calculate the price and quantity that would prevail if the proposed policy is enacted.
With reference to the answers obtained in 1 and 2, use a graphical illustration to analyse the economic welfare implications of the proposed policy.

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:
I
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.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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