Question
please answer quickly?? Suppose U.S. is exporting natural gas. The demand and supply functions are as following: Demand: P = 100 - 1.5Q Supply: P
please answer quickly??
Suppose U.S. is exporting natural gas. The demand and supply functions are as following:
Demand: P = 100 - 1.5Q
Supply: P = 25 + Q
The world price for natural gas is $70 per unit.
Questions:
Draw demand and supply curves and find the market price for natural gas in the U.S. without trade.
Trade opens. Calculate how many units of natural gas that the U.S. is exporting.
The U.S. government wants to encourage export, so it give producers who sells internationally export subsidy of $15 per unit. Answer the following questions:
Find the new quantity of exports.
Calculate consumer surplus and producer surplus at this condition.
Calculate how much taxpayers have to pay for this export subsidy.
Is there any deadweight loss? How much?
2. The U.S. is importing furniture from China because of the low price. The demand for furniture in The U.S.: P = 1200 - 2Q and the supply for furniture in the U.S.: P = 200 + 3Q, where P is the price of the furniture in dollar and Q is the quantity of the furniture traded in units.
The price of the furniture that the U.S. can get from China is $500 and The U.S. imposes the tariff of $200 on the price of the imports.
Now, the U.S. forms an FTA agreement with Canada to the exclusion of China. Canada has a higher cost of production than China. The price of the furniture in Canada is $600. FTA agreement states that all trade restrictions are abolished between The U.S. and Canada, so no tariffs for either country.
Draw the demand and supply curves for furniture in the U.S. and find the equilibrium quantity and price of furniture.
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