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Suppose Qd=-32*P+884, Qs=36*P+14 for home and Qd*=-32*P+136, Qs*=36*P+32 for foreign. What is the free trade volume to two decimal places?

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Paramjeet Chawla
Paramjeet ChawlaLv8
28 Sep 2019
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Related questions

Suppose the market for semiconductors in the U.S. has the following demand and supply equations.

Qd= 200 - 40 P

Qs= 40 + 40P

The demand and supply equations in the world market are as follows.

Qd= 160 - 40P

Qs= 80 + 40P

a. What is the price in the U.S. market and in the world in the absence of trade?

b. What will be the equilibrium price after the trade?

c. What should be the price in the U.S. to restrict imports to 16 million?

d. What will be the deadweight loss?

1. You own a pizza shop and you use both labor and capital to make your pizzas. Currently the marginal product of labor is 5 pizzas per hour, while the marginal product of you capital is 2 pizzas per hour. You pay your labour $10 per hour, and your capital costs you $5 per hour. The price of pizza is $2.50. Is you little shop using its inputs efficiently? Explain.

2. What is the difference between a profit and a rent? If a firm is interested in maximizing profits, why would it stay in an industry if profits are zero?

3. The “Vintage Sisters” collect old junk, fix it up, and sell it at craft fairs as a hobby. All of their costs are covered by their poor father who lets them use his shop, tools, and paint for free. When pricing their stuff, what elasticity of demand should they aim for? Why?

4. Solve for the equilibrium price and quantity (P* and Q*) both algebraically and graphically (using graph paper), for these four markets:

Market 1:

QD = 10 – P

QS = 5

Market 2:

QD = 10 – P

QS = 5 + P

Market 3:

QD = 10 – ½ P

QS = 5 + 2 P

Market 4:

P = 10 – 2QD

QS = 1 + P

Suppose the market demand and supply (bottles/month) for bottled water are given by Qd = -150P + 1500 Qs = 450P - 300 where Qd is the market demand, Qs is the quantity supplied and P is the price of a 1Lt bottled water. The market is assumed to be competitive.

Consider a hypothetical policy initiative in the bottled water market that forces prices up to $6.50 per unit. Calculate the deadweight loss to society from this policy. 

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