Under a partial equilibrium model with a perfectly competitive market, suppose that the domestic demand and supply of toys in a large Home economy are given by: Home: Demand function: P = 150-Q and Supply function: P=50+Q where Q denotes the market quantity and P indicates the market price in the economy. Now this country opens for free trade and the global import demand function is given as P*=150-(1/2)Q*, where P* and Q* are the price and the quantity in the global market, respectively. Now, suppose that the government gives 20 dollars of production subsidy for toy producers. Please answer to the following questions, 21 and 22. 21. What is the national welfare for the country? a) 2700 b) 2900 c) 3100 d) 3300.
Under a partial equilibrium model with a perfectly competitive market, suppose that the domestic demand and supply of toys in a large Home economy are given by: Home: Demand function: P = 150-Q and Supply function: P=50+Q where Q denotes the market quantity and P indicates the market price in the economy. Now this country opens for free trade and the global import demand function is given as P*=150-(1/2)Q*, where P* and Q* are the price and the quantity in the global market, respectively. Now, suppose that the government gives 20 dollars of production subsidy for toy producers. Please answer to the following questions, 21 and 22. 21. What is the national welfare for the country? a) 2700 b) 2900 c) 3100 d) 3300.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Under a partial equilibrium model with a perfectly competitive market, suppose that the domestic demand and supply of toys in a large Home economy are given by:
Home: Demand function: P = 150-Q and Supply function: P=50+Q
where Q denotes the market quantity and P indicates the market price in the economy. Now this country opens for free trade and the global import demand function is given as P*=150-(1/2)Q*, where P* and Q* are the price and the quantity in the global market, respectively. Now, suppose that the government gives 20 dollars of production subsidy for toy producers. Please answer to the following questions, 21 and 22.
21. What is the national welfare for the country?
a) 2700
b) 2900
c) 3100
d) 3300.
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