Calculate the market clearing price level and quantity

Reference no: EM13243455

If we examine the market for rice in USA during the year2007 and 2009, the demand of rice was higher in the year 2007 but it felldown during the year 2009, due to the drop in the export demand of rice. But the Government wants to keep the price of rice at higherlevel.
The given equations show the quantity demanded and quantitysupplied of rice during the year 2007.
Year 2007: Demand: Qd = 1,600 - 125P
Year 2007 Supply: Qs = 440 + 165P

a. Calculate the market clearing price level and quantity inthe year 2007, in that year there were no effective limitations on the production of rice.

b. Why the government wants to keep the price at higher leveli.e. to $5.50 when there is decline in export demand. Will it effect on the quantity demanded or quantity supplied equation and curve and how much?

c. Now with the help of new quantity equation calculate what should be the quantity of rice which the government must buy?

Reference no: EM13243455

Questions Cloud

What would nation bs best choice in regards to trade : Suppose Nation A can produce 2 million pounds of sugar per week OR 1 million pounds of rice in a week and Nation B can produce 10 million pounds of sugar per week OR 3 million pounds of rice in a week. If this is a two-good, two nation model,

Explain how many grams of iron are needed to produce : How many grams of iron are needed to produce 2.85 L of hydrogen gas according to the following reaction at 25oC and 1 atm

Find the final volume of the gas : We have a container of compressed air. Assume that air is a diatomic ideal gas. The volume of the container is 1.35 liters. Find the final volume of the gas

Distribution of the independent variable : The standard error of the estimate (standard error) is the estimated standard deviation of the distribution of the independent variable and in Regression Analysis if the variance of the error term is constant, we call it the Heteroscedasticity prope..

Calculate the market clearing price level and quantity : If we examine the market for rice in USA during the year2007 and 2009, the demand of rice was higher in the year 2007 but it felldown during the year 2009, due to the drop in the export demand of rice.

Define what volume of hydrogen gas is produced : What volume of hydrogen gas is produced when 62.0 g of sodium reacts completely according to the following reaction at 25 oC and 1 atm? sodium (s) + water (l) ----sodium hydroxide (aq) + hydrogen (g)

Discuss the issue of health care in the context : As prices increase, should health economists advocate giving something up (opportunity costs/trade-offs)? As the quantity of health services provided goes up, does the benefit of each additional unit of service become smaller (marginal analysis)?

Describe a sample of nitrogen gas that occupies a volume : A sample of nitrogen gas that occupies a volume of 31.2 L at a temperature of 0 oC and a pressure of 1 atm contains , answer in moles of gas please.

What is the total mechanical energy of the sled : A sled and rider with with a combined mass of 50kg are at the top of a hil a height of 14m above the level ground below, After the push, what is the total mechanical energy of the sled and rider at the top of the hill

User Account

All Pages