Reference no: EM131101205
Ghana is a producer and exporter of crude oil. Since Ghana is a relatively small crude-oilproducing country, its actions do not affect world prices; as an exporter, Ghana faces a foreign demand curve that is perfectly elastic at a price of $ 15 per barrel. The equation for the domestic demand curve is Qd =26 -P, where price (P) is measured in dollars per barrel and quantity demanded (Qd) is measured in billions of barrels per year. The equation for the domestic supply curve is Qs = 10 + P, where quantity supplied (Qs) is measured in billions of barrels per year.
a. Assuming free trade, show graphically how much crude oil will be produced, consumed, and exported by Ghana.
b. Graphically, show the gains from trade. Explain who wins and who loses, and show by how much in terms of producer and consumer surplus. Does everyone in Ghana benefit from free trade? Explain why or why not. Is Ghana as a whole better off? Explain.
c. Suppose that the government of Ghana provides a $2 per-barrel subsidy for every barrel of crude oil from Ghana bought by foreigners. Graphically, show the effects of the subsidy on domestic production; domestic consumption; exports; and the welfare of producers, consumers, the government, and Ghana as a whole.
|
Domestic supply and domestic demand curves for boxes
: Costa Rica is a “small” country and assumed to be unable to affect world prices. It imports blueberries at the price of 10 dollars per box. The Domestic Supply and Domestic Demand curves for boxes are: S = 60 + 20P D = 1160 − 15P. What happens to the..
|
|
Assume that the demand curve
: Assume that the Demand curve is given as Q=250-5P and the supply curve as P=10+Q. What would be the price and quantity with perfectly competitive markets? What will happen to price and quantity if the government provides a specific subsidy of $1 per ..
|
|
What is the equation for the firm short-run supply curve
: Assume that a firm has the following short-run production function: q = 10L^0.5 and that the market wage rate is 4. Derive the equations for marginal and average product of labor. What is the equation for the firm’s short-run supply curve?
|
|
Find corresponding total cost and marginal cost functions
: The demand for labor by a monopsonist is given by W^d=17-L. The inverse supply curve of labor is given by W^s=2+2L. 1. Find the corresponding total cost and marginal cost functions of this monopsonist. Assume that labor is the only input.
|
|
Relatively small crude-oilproducing country
: Ghana is a producer and exporter of crude oil. Since Ghana is a relatively small crude-oilproducing country, its actions do not affect world prices; as an exporter, Ghana faces a foreign demand curve that is perfectly elastic at a price of $ 15 per b..
|
|
What is the project''s expected npv if the tax is imposed
: The project has a 12 percent cost of capital. Assume at the outset that the company does not have the option to delay the project. Use decision tree analysis to answer the following questions. a. What is the project's expected NPV if the tax is impos..
|
|
What is the project''s expected npv if the tax is imposed
: The project has a 12 percent cost of capital. Assume at the outset that the company does not have the option to delay the project. Use decision tree analysis to answer the following questions. a. What is the project's expected NPV if the tax is impos..
|
|
Should hart purchase the paper company
: Hart Lumber is considering the purchase of a paper company. Purchasing the company would require an initial investment of $300 million. Hart estimates that the paper company would provide net cash flows of $40 million at the end of each of the next 2..
|
|
What is the project''s net present value
: there is a 10 percent chance that the cash flows will be $2.2 million a year for 4 years. Assume that all cash flows are discounted at 10 percent. a. If the company chooses to drill today, what is the project's net present value? b. Using decision tr..
|