4. A vegetable fiber is traded in a competitive world market, and the world price is $9 per pound. Unlimited quantities are available for import into the United States at this price. The U.S. domestic supply and demand for various price levels are shown as follows:

a. What is the equation for demand? What is the equation for supply?

b. At a price of $9, what is the price elasticity of demand? What is it at a price of $12?

c. What is the price elasticity of supply at $9? At $12?

d. In a free market, what will be the U.S. price and level of fiber imports?

Transcribed Image Text:

Price 3 U.S. Supply (Million Lbs) 2 U.S. Demand (Million Lbs) 34 28 9 22 12 8 16 15 10 10 18 12