QUESTON 6 and 7 only please. Please provide graphs and calculations.
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PART 2 A - Closed Economy The demand and the supply for broccoli' in Veganstan's closed economy are given by QD= 60 - 2P, and Qs = 38P. 1. Equilibrium (Q") is calculated using the equation Qp = Qs = Q" Hence, 60 - 2P = 38P 60 = 40P P = $1.5 Substituting P=1.5 into one of the equation then gives us 38(1.5) = 57. This means that the equilibrium price is at $1.50 and the quantity is 57 kilograms. 2. Price ($o Qs : 380 PCE 1.5 & Qo: 60-P 60 QUE: 57 Qty 6: Assume that while allowing for free trade with Beefland, Veganstan's policy makers decide to give to all broccoli producers in Veganstan a subsidy of 0.5 $ per kg produced. For Veganstan: a) graphically show the post subsidy equilibrium price PS and quantity Qs: b) briefly discuss how Ps and Qs compare to PFT and QFT; c) discuss the effect of the subsidy on the quantity of broccoli that is being supplied domestically, as well as on the quantity that is being imported from Beefland; d) discuss the welfare implications of the subsidy relative to free trade. 7: For this question only, we assume that cauliflower is a substitute for broccoli. Both demand and supply are expressed in kilograms (kg), and all prices are in dollars ($). ? By graphically show", we mean that you should use the demand and supply graphidiagram analisys. Recall that by welfare implications" we mean consumer surplus, producer surplus, deadweight loss, and overall welfare (including e.g. tax revenue or subsidy costs, if relevant). Beefland can produce virtually unlimited quantities of cauliflower at a lower price than Vegastan; furthermore, Beefland's production price for cauliflower coincides with the world price for it. Assume that we start from a situation where there is free trade between Veganstan and Beefland both the broccoli and cauliflower markets, but then Veganstan's policy makers introduce a tariff of 0.58 per kilogram on all of the broccoli that is being imported from Beefland. Discuss the effect that you would expect the tariff on broccoli to have on Veganstan's equilibrium price and quantity in the cauliflower market. PART 2 A - Closed Economy The demand and the supply for broccoli' in Veganstan's closed economy are given by QD= 60 - 2P, and Qs = 38P. 1. Equilibrium (Q") is calculated using the equation Qp = Qs = Q" Hence, 60 - 2P = 38P 60 = 40P P = $1.5 Substituting P=1.5 into one of the equation then gives us 38(1.5) = 57. This means that the equilibrium price is at $1.50 and the quantity is 57 kilograms. 2. Price ($o Qs : 380 PCE 1.5 & Qo: 60-P 60 QUE: 57 Qty 6: Assume that while allowing for free trade with Beefland, Veganstan's policy makers decide to give to all broccoli producers in Veganstan a subsidy of 0.5 $ per kg produced. For Veganstan: a) graphically show the post subsidy equilibrium price PS and quantity Qs: b) briefly discuss how Ps and Qs compare to PFT and QFT; c) discuss the effect of the subsidy on the quantity of broccoli that is being supplied domestically, as well as on the quantity that is being imported from Beefland; d) discuss the welfare implications of the subsidy relative to free trade. 7: For this question only, we assume that cauliflower is a substitute for broccoli. Both demand and supply are expressed in kilograms (kg), and all prices are in dollars ($). ? By graphically show", we mean that you should use the demand and supply graphidiagram analisys. Recall that by welfare implications" we mean consumer surplus, producer surplus, deadweight loss, and overall welfare (including e.g. tax revenue or subsidy costs, if relevant). Beefland can produce virtually unlimited quantities of cauliflower at a lower price than Vegastan; furthermore, Beefland's production price for cauliflower coincides with the world price for it. Assume that we start from a situation where there is free trade between Veganstan and Beefland both the broccoli and cauliflower markets, but then Veganstan's policy makers introduce a tariff of 0.58 per kilogram on all of the broccoli that is being imported from Beefland. Discuss the effect that you would expect the tariff on broccoli to have on Veganstan's equilibrium price and quantity in the cauliflower market
