Domestic demand function for peanuts

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Reference no: EM131166564

Suppose that we know that the domestic demand function for peanuts (holding domestic income and other demand shifting variables constant) is:

P = 30 - 0.004 Q.

a) If there is no international trade, what is the equilibrium price and quantity?

b) Suppose that the world price of peanuts is $5 per bushel and international trade is not restricted. Find the domestic production and consumption of peanuts and US imports at the world price.

c) Suppose that the US government wishes to restrict imports to 1000 (million bushels) per year. What $/bushel tariff would have this effect?

d) How much tariff revenue per year would a $1/bushel tariff on peanuts generate?

Reference no: EM131166564

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