Question

pls explain steps too!

2. In contrast to strawberries, Canada is a major exporter of wheat. Canada's demand (Qc) and supply (SCN) of wheat is given respectively by Qax = 80 - 20 PCON and QCDN = 40 + 20 PCON where Pis the price per bushel of wheat. a) Derive the excess supply curve of wheat for Canada. (3 marks) b) What will be the price at which Canada does not export wheat? (3 marks) c) China is the major importer of Canadian wheat. Its demand (Q) and supply ( ) for wheat is given respectively by Q x = 100 - 20 P. and Q = 20 + 20 PH Derive the excess demand curve for wheat in China. (3 marks). d) What would wheat price be in China in the absence of trade? (3 marks) e) If Canada and China are allowed to trade with one another, what will be the price and the volume of trade? (5 marks) f) The trade war has heated up and China imposes a tariff of 0.5 per bushel. Determine the effect of the tariff on: (1) the price of wheat in each country, (2) the quantity of wheat produced and consumed in each country, and (3) the volume of trade. (15 marks)

Answer 1

2)a)excess supply=supply- demand=40+20pc-80+20pc=-40+40pc

B) If Canada doesn't export, it means excess supply=0

0=-40+40pc

Pc=40/40=1

At pc=1 ,canada doesn't exports.

C) Excess demand=Demand- supply

Excess demand=100-20ph-20-20h=80-40ph

d)In absence of trade the opricr in china china will be ,that clear the domestic market and no excess demand.

SoIn absence of trade , excess demand will be zero.

0=80-40ph

Ph=80/40=2

So ,ph=2 will be price in China in absence of trade.