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Take a look at the sugar market: US demand: Q=60-2/3 P US domestic supply: Q=P Also, the US could import any quantity from world producers at (US$) 10/cents per lb
a) In a scenario with free trade- what would be equilibrium price in US, also what would be consumer surplus and producer surplus?
b) Assume FDA changes its mind and opens her US to sugar imports; however the government wants to promote domestic sugar production by giving a subsidy of 15 cents/lb
What would be new equilibrium price and quantity?
How much is domestic produced and how much is imported?
What is new consumer surplus and producer surplus?
What is deadweight loss compared to the scenario in question a)?
The more certain private property rights are, a. the less people need to invest in education or human capital development. b. The less entrepreneurship there will be. c. t
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Aggregate Demand Policies Both fiscal and monetary policy changes shift the AD curve. Let us see how, starting with a fiscal expansion. See figure 6.2. In the upper panel, the
Suppose Zippy's Banana Juice can produce according the following long-run production function. Q = 5 L 2 + 20 K - 0.4 K 2 where Q is gallons of juice per hour, L is labor hours,
The entire market is capture by a single firm which can produce at a constant average and marginal cost of AC = MC = 10. The firm faces a market demand curve given by Q = 60 ? P.
How can we define the real wage as nominal wage We define real wage as nominal wage divided by a price index (typically CPI). In the illustration above, your real wage was 20 i
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