Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 20PAA
To determine
To analyze U.S. steel market and effect on
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that President Clinton has recently recommended that the U.S. should use some of the strategic oil reserves (oil stored underground and owned by the United States government) in order to solve the U.S. oil supply problem. Assume that quantity demanded in the short-run is inelastic at 1 million barrels per day. The quantity supplied (per day) is equal to 700,000 + 10,000P (where P is the price for a barrel of oil).
a. What would be the current price for a barrel of oil? N
b. If Clinton releases 100,000 barrels per day, what is the new equilibrium price and quantity? N
c. Presidential candidate George W. Bush proposed that all states lower their gasoline tax. Assume that the gasoline tax reduction leads to a $10 decrease in the tax on a barrel of oil (i.e., supply side). What is the new price and quantity? N How much of the tax savings will be passed on to consumer through lower prices? Assume that the changes in part b. have not occurred.
d. What impact do each of these two…
Suppose that President Clinton has recently recommended that the U.S. should use some of the strategic oil reserves (oil stored underground and owned by the United States government) in order to solve the U.S. oil supply problem. Assume that quantity demanded in the short-run is inelastic at 1 million barrels per day. The quantity supplied (per day) is equal to 700,000 + 10,000P (where P is the price for a barrel of oil).
a. What would be the current price for a barrel of oil? N
b. If Clinton releases 100,000 barrels per day, what is the new equilibrium price and quantity? N
c. Presidential candidate George W. Bush proposed that all states lower their gasoline tax. Assume that the gasoline tax reduction leads to a $10 decrease in the tax on a barrel of oil (i.e., supply side). What is the new price and quantity? N How much of the tax savings will be passed on to consumer through lower prices? Assume that the changes in part b. have not occurred.
d. What impact do each of these two…
The total/aggregate market demand for rubber erasers can be segmented into two components.
The first component is the demand for rubber erasers by art students. This demand is given by
Qa=10,000-250P. The second component is the demand for rubber erasers by all other
purchasers. This demand is given by Qo=15000-500P.
a) Draw the demand curve for art students, the demand curve for other purchasers and the
aggregate demand curve
b) Derive the algebraic expression for the aggregate demand curve.
c) If the equilibrium price is $20, determine the consumer surplus for art students.
Chapter 8 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Knowledge Booster
Similar questions
- S S p' p* D Y* X' X* →数量 M The supply function and demand function of a certain agricultural product are as follows: S=2p- 40, D=-2p+120. p is the unit price. Let's assume that the home country is a small country. The international price of the product is P*=25. The government then decides to impose restrictions on the import quantity of this product and the limited amount is ='-' (see the graph). In an open economy situation, when M=40, please answer questions 15-18.15. Please calculate the consumer surplus of this country. 16. Please calculate the producer surplus of this country. 17. Please calculate the total surplus of this country. 18. Please calculate the deadweight loss of this country.arrow_forwardYou are the manager of medium-sized company that deals in production of make-ups in Ghana. Suppose one morning you heard on the news that the government has imposed a lump sum tax on every unit of make-up sold in the market. In addition, suppose during the same period, the price of a leading substitute product decreases along with the change the effect of the tax mentioned above, how would you expect the equilibrium price and quantity of make-up to change assuming the effect of the lump sum tax is larger? [Illustrate by using a graph].arrow_forwardRecently, the spot market price of U.S. hot rolled steel plummeted to $400 per ton. Just one year ago, this same ton of steel cost $700. According to Metals Monitor, the drop in price was due to falling oil prices, along with a rise in cheap imports and excess capacity. These dramatic market changes have greatly impacted the supply of raw steel. Suppose that last year the supply for raw steel was QS, raw = 600 +4P, but this year it has shifted to QS raw- = 4,200 +4P. Assuming the market for raw steel is competitive and that the current worldwide demand for steel is Qara raw 9,000 -8P, compute the equilibrium price and quantity for the steel market one year ago, and the equilibrium price-quantity combination for the current steel market. Instructions: Enter your responses as whole numbers. Price one year ago: $ Quantity one year ago: Price for current market: $ Quantity for current market: Suppose the cost function of a representative steel producer is C(Q) = 1,200 + -15Q². How much raw…arrow_forward
- Due to several supply-chain issues the price of computer chips has risen in recent months (this part is true and there is no need to prove it to be so). The result of this change would be to increase the price of automobiles that require many computer chips in their manufacture.arrow_forwardConsider the demand function for processed pork in Canada, Qd = = 270.00 - 12p +20p + 3pc +0.002Y The supply function for processed pork in Canada is: Qs p is the price of pork Q is the quantity of pork demanded (measured in millions of kg per year) Solve for the equilibrium price and quantity for pork. The equilibrium price of pork is $ rounded to two decimal places.) = 234.00 + 36p - 60ph Pp is the price of beef = $4 per kg Pc is the price of chicken = $3 per kg Y is the income of consumers = $12,500 Ph is the price of a hog = $1.50 per kg and the equilibrium quantity of pork is million kg per year. (Enter numeric responses using real numbersarrow_forwardAt a price of $2.28 per bushel, the supply of a certain grain is 7100 million bushels and the demand is 7700 million bushels. At a price of $2.35 per bushel, the supply is 7500 million bushels and the demand is 7600 million bushels. (A) Find a price-supply equation of the form p = mx +b, where p is the price in dollars and x is the supply in millions of bushels. (B) Find a price-demand equation of the form p=mx+b, where p is the price in dollars and x is the demand in millions of bushels. Р (C) Find the equilibrium point. (D) Graph the price-supply equation, price-demand equation, and equilibrium point in the same coordinate system. (A) The price-supply equation is p = (Type an exact answer.) (B) The price-demand equation is p =. (Type an exact answer.) (C) The equilibrium point is. (Type an ordered pair. Type an exact answer. Use integers or decimals for any numbers in the expression.) (D) Choose the correct graph below. O A. Ap 3- 2- 7000 8000 Q O B. Ap 7000 8000 Q O C. 3 Ap 7000…arrow_forward
- Assume that producers in Luzon can only produce 11 billion kg of palay at the time ofharvest even if price reaches PhP 30 per kg, what will be the value of their own priceelasticity of supply?arrow_forwardThe market for gravel has the following demand and supply relationships: Supply function: Q = 100P - 1,000 Inverse demand function: P = 50 - 0.01*Q + PX, where P represents price of gravel per ton in dollars, Q represents sales of gravel per week in tons, and PX is the price of some other product X in dollars per unit. Let PX = $50/ton In a diagram, qualitatively describe the change that would occur in the market for gravel (i.e. equilibrium price and quantity) if a new discovery has just made the production of product X cheaper. Briefly explain whether it is a movement along or shift of demand curve and supply curve for gravel. In addition to the new discovery regarding product X in previous question), suppose now workers producing gravel ask for sick leave due to COVID. Use supply and demand analysis to predict how these two shocks will affect equilibrium price and sales. Illustrate your results in a diagram. Is there enough information to determine if market prices will rise or…arrow_forwardYou are the Economic Consultant for Zuku Farms Ghana Limited. Zuku produces cowpea in a community where producers are able to switch back and forth between cowpea and groundnut depending on market conditions. Consequently, you were tasked by the management of Zuku and you estimated the demand function for cowpea as follows: where is the quantity of cowpea demanded in bags per month, is the average price of cowpea in Ghana Cedis, is the average price of groundnut in Ghana Cedis, and Y is the income of consumers. Assuming is initially GH¢31.00 per bag, Y is GH¢1001.50. Also that your estimated supply function for cowpea is as follows: QS = -25 + 3.5PC -1.5Pf – 0.5Pg + 0.25R Where Qs is the quantity supplied of cowpea in bags, Pc and Pg are as defined above, Pf is the price of fertilizer per bag, R is the amount of rainfall (in inches). If Pf = GH¢10, R= 40 inches and Pg= GH¢31.00 Find the resulting supply function for cowpea and determine the equilibrium price and quantity.…arrow_forward
- Steve and Michelle are farmers who sell their surplus manure to other local farmers. Manure is sold by the cubic yard. (Dirt, soil, mulch etc. are often sold by this measurement.) Steve and Michelle have no costs of production. (Buyers come and pick up their manure themselves.) Market demand is given as P = 96 - 4Q, MR = 96 - 8Q, and MC = ATC = 0. Complete parts a through d below. ..... a) If Steve and Michelle agree to split the monopoly outcome, how much would each farmer produce and what would be the individual profits? Each farmer would produce 6 cubic yard(s). The profit for each farmer would be $ 288 b) Suppose Steve decides to cheat on the agreement and produces 7 cubic yards. What is Steve's profit now? What is Michelle's profit now? Steve's profit is now $ Michelle's profit is now $ c) Suppose Michelle considers retaliation and thinks about producing 7 cubic yards. What would her and Steve's profits be in this case? Should Michelle retaliate? In this case, Michelle's profit…arrow_forwardWhy would demand for steel may decline when demand for aluminum rises? What kind of relationship exists between the two?arrow_forwardDo answer all questions. Thanks a) Consider two substitute goods, diesel and compressed natural gas. You are given the demand and supply function of diesel as follows Q = 4.2PC -4PD and Q = 15 + 5PD + 0.30000000000000004PC ; where PD and PC are the prices of diesel(D) and compressed natural gas(C), respectively. If the price of CNG is $6, what is the market price of diesel? b) Now, suppose government decides to regulate the price of diesel and they fix the price at $7.0, ceteris paribus, will there be a surplus or shortage? Calculate the amount of surplus/shortage. (c) Suppose that the market for diesel is not regulated anymore. If the price of CNG has increased from $6 to $11, what will be the new market price of diesel?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning