ZuoTi.Pro
Question

A demand function for milk has been estimated as ? = 60 − 3? and a...

A demand function for milk has been estimated as ? = 60 − 3? and a supply function for milk has been estimated as ? = 5 + 2.5?.

Now assume that the US government imposes an import quota of 1.67 units, and that milk farmers are authorised to restrict US milk production (you can assume that milk producers behave as profitmaximising monopolists). Modify your diagram to include the effects of the proposed policy. Label all relevant elements on your diagram (prices, quantities supplied and demanded, imports, supply, and demand). Include the numerical values for the important points in your diagram. Calculate consumer surplus, producer surplus, importer rents, government expenditure, deadweight loss, and total welfare. You must show your work to receive full marks. (16 marks)

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

DD = 60-3P Ss= 5+2.5P DO=ss - 60-31=5+2.5P 60-5=2.5P+3P 55 -5.5P P = 55 = 10 5.5 DO = 60-3x10 = 30 SS = Ś+2-5X10 = 30 YA 201

0 0
Add a comment
Know the answer?
Add Answer to:
A demand function for milk has been estimated as ? = 60 − 3? and a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A demand function for milk has been estimated as P = 60 – 3Q and a...

    A demand function for milk has been estimated as P = 60 – 3Q and a supply function for milk has been estimated as P = 5 + 2.5Q. 1. Draw a diagram of this market in competitive autarky equilibrium (without the policy). Label all relevant elements (prices, quantities, supply, and demand). Include the numerical values for the important points in your diagram. Calculate consumer surplus, producer surplus, government expenditure, deadweight loss, and total welfare in this market. (7 marks)...

  • The market for rice in a country has the following demand and supply functions: Demand function:                     ...

    The market for rice in a country has the following demand and supply functions: Demand function:                      P = 6 – 0.5QD Supply function:         P = 2 + 0.5QS Where QD is the quantity demanded, QS is the quantity supplied and P is the unit price of rice. Determine the equilibrium price, quantity, consumer surplus and producer surplus in the rice market. Illustrate your answers with a suitable rice market diagram. (8 marks) To help the rice farmers, the government has...

  • The demand and supply conditions of market for beer are given by the following equations: Qd...

    The demand and supply conditions of market for beer are given by the following equations: Qd = 72 - P and Qs = -18 + P a) Find the initial equilibrium price and quantity. b) Calculate the consumer surplus and producer surplus for the equilibrium. c) Suppose that government impose a price floor at P=66 to control the consumption of beer. Is this policy effective? What are price and quantity consumed after this intervention of government? d) Going back to...

  • 500 1000 1500 16) The above figure shows the demand and supply curves in the market...

    500 1000 1500 16) The above figure shows the demand and supply curves in the market for milk. If the government imposes a quota at 500 gallons, calculate the change in the consumer surplus. Assume that prices stay the same. A) ACS--150 D) ACS- 200 C) ACS--500 B) aCS--250 a, 17) The above figure shows supply and demand curves for milk. In an effort to help farmers, the passes a law that establishes a s3 per gallon price support. To...

  • Assume that the market demand and supply curves for milk are as shown in the graph...

    Assume that the market demand and supply curves for milk are as shown in the graph below. As shown in the graph, the market clearing price is $3 per gallon and the quantity exchanged is 100 gallons per hour. Now assume that the government imposes a tax of 2$ per gallon of milk produced. a. What is the total tax revenue the government will collect? Also, shade the area on your graph where the total tax revenue is represented. b....

  • 1. The demand and supply functions for widgets are as follows: Qd =60-0.5P Qs =0.5P-20 a....

    1. The demand and supply functions for widgets are as follows: Qd =60-0.5P Qs =0.5P-20 a. Solve for the competitive equilibrium price and quantity of widgets in this market. Illustrate this equilibrium in a graph. On your graph, show the regions that represent consumer surplus and producer surplus. Calculate the value of consumer surplus, producer surplus, and overall welfare. b. Suppose the government enacts a law stating that only 10 widgets can be produced and sold in the market. At...

  • Suppose that the demand curve for wheat is Q=140 - 10p and the supply curve is...

    Suppose that the demand curve for wheat is Q=140 - 10p and the supply curve is Q = 10p. The government imposes a specific tax of = 1 per unit. a. How do the equilibrium price and quantity change? (Round quantities to the nearest integer and round prices to the nearest penny) The equilibrium quantity without the specific tax is 70 and the price without the specific tax is $ 7. The equilibrium quantity with the specific tax is 65...

  • Question 3: Suppose that the demand equation: P- 10-Q and supply equation: P Q a. Calculate...

    Question 3: Suppose that the demand equation: P- 10-Q and supply equation: P Q a. Calculate the equilibrium price and quantity b. Calculate the consumer surplus, producer surplus and total surplus at equilibriunm Suppose the government imposes a tax of $2 for each unit bought. Derive the new equilibrium price that consumers pay, the price that firms receive, and quantity c. d. Calculate the deadweight loss of this tax. e. In a diagram, show the equilibrium in part a and...

  • The wage rate in a labor market is $20. At this wage, firms hire 300 million...

    The wage rate in a labor market is $20. At this wage, firms hire 300 million hours of work and workers supply 300 million hours. The elasticity of labor demand is -0.2 and the elasticity of labor supply is 0.1. Then the government imposes a payroll tax of $1 per hour of work on firms. After the tax is imposed,                                                         [15 points] How much does it cost firms to hire an hour of labor, including cash wage plus tax?...

  • The inverse demand function of a group of consumers for a given type of widgets is...

    The inverse demand function of a group of consumers for a given type of widgets is given by the following expression: 2.2 π=-104 + 2000 (S) 2.3 2.4 and 2.5 Economists estimate that the supply function for the widget market is given by the following expression: 2.3 4-0.2--40 a Calculate the demand and price at the market equilibrium if the demand is as defined in Problem 2.2 b For this equilibrium, calculate the consumers' gross surplus, the consumers' net surplus,...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT