Qc = 20- Pc Qw= 16- 3Pw

X A Exam 2 - ECON 150C1 SP20 X A Exam 2 - ECON 150C1 SP20 0 X G Problem: Agricultural trade be X simultaneous equilibrium de na.edu/d21/le/content/881815/fullscreen/8721358/View Upda Do you update The exam does not require you to graph any supply and demand curves for corn and wheat, but drawing such graphs may help you to solve the problems or at least to visualize their solution. In all cases, the farmers' supply curves consist of horizontal and vertical segments, while the demand curves have the more familiar downward slope. The answers to the initial questions rely heavily on farmers' rational response to prices. a) If pc Pw, then what will be the quantity supplied of each crop? Is there a market equilibrium that has Pc > Pw? c) Is there a market equilibrium that has Qe + Qw 20? What is the equilibrium (Pc, Pw, Qc,Qw) of the two markets simultaneously? In this equilibrium, what is the farmers' total revenue (combining all of the farmers)? Now suppose that the (two-country ) demand for wheat and corn is unchanged, but 8 acres of land in Canada also become available for wheat or corn production. Just as in the U.S., the land has no other use. In Canada, however, the land is less productive: each acre of Canadian land can produce 1/2 unit of wheat or 1/10 unit of corn. As in the U.S., there is no additional cost of production. We are again interested in finding the simultaneous equilibrium in both markets. The demand for each crop in the combined market is unchanged, and there is still just one market price for corn and one market price for wheat. The difference is that now there are two potential sources of supply: U.S. farmers and Canadian farmers. Note again that there is only one simultaneous equilibrium. Because of the differences in productivity, U.S. farmers' rational response in some cases differs from the Canadian farmers' rational response. g) If Pc