Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 22, Problem 11CQ
To determine
The effects of drought in a perfect competitive market.
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Students have asked these similar questions
The food and feed demand curves used in the Application "Summing the Corn Demand Curves," were estimated by McPhail and Babcock (2012) to be
Qfood = 1,487-22.1p
and
Qfeed = 6,247.5-226.7p,
respectively, where Q is measured in billions of bushels of corn per year. Mathematically derive the total demand curve, which the application's figure illustrates. (Hint:
Remember that the demand curve for feed is zero at prices above about $27.56 per bushel.)
The total demand curve is (enter your responses rounded to one decimal place):
Q=-p for p≥ $27.56 per bushel and Q =
-p for p <$27.56 per bushel.
A retail chain will buy
900
cordless phones if the price is
$30
each and
800
if the price is
$40.
A wholesaler will supply
350
phones at
$40
each and
1400
at
$70
each. Assuming that the supply and demand functions are linear, find the market equilibrium point and explain what it means.
D1 D2
P2
P1-L
Q1 Q2
Company X is a Georgia-based automobile manufacturer that produces a single model of car, the Destiny. Another company, Company
Y, produces a car known as the Kismet that is widely viewed by the automobile industry as the Destiny's equal. Which of the following
developments would MOST LIKELY lead to the changes illustrated on the graph in the market for the Destiny?
a significant decline in the price of the Kismet
a significant rise in the income levels of consumers interested in the Destiny
Chapter 22 Solutions
Economics: Private and Public Choice
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- You are the Economic Consultant for Zuku Farms Ghana Limited. Zuku produces cowpea in a community where producers are able to switch back and forth between cowpea and groundnut depending on market conditions. Consequently, you were tasked by the management of Zuku and you estimated the demand function for cowpea as follows: where is the quantity of cowpea demanded in bags per month, is the average price of cowpea in Ghana Cedis, is the average price of groundnut in Ghana Cedis, and Y is the income of consumers. Assuming is initially GH¢31.00 per bag, Y is GH¢1001.50. Also that your estimated supply function for cowpea is as follows: QS = -25 + 3.5PC -1.5Pf – 0.5Pg + 0.25R Where Qs is the quantity supplied of cowpea in bags, Pc and Pg are as defined above, Pf is the price of fertilizer per bag, R is the amount of rainfall (in inches). If Pf = GH¢10, R= 40 inches and Pg= GH¢31.00 Find the resulting supply function for cowpea and determine the equilibrium price and quantity.…arrow_forwardplease answer part darrow_forwardThe 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 small 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 an 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 your aner and illustrate using your diagram in part…arrow_forward
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