The following information applies tothe next 8 questions: Consider the following

information on production capacities for the market for a (commodity) metal and its

associated marginal costs (all other costs have been sunk). Please select the correct answer

andthen explain graphically. Graphs must beaccurateand can be drawn in pen or pencil,

but, as for all other questions, text must be typed.

Country Annual production (t) Marginal cost ($/t)

Argentina 2500 25

Brazil 3000 30

Canada 2000 70

Congo 2000 45

Indonesia 1000 20

Russia 3000 50

South Africa 2000 40

Zimbabwe 500 45

Global annual demand (in t) is given by: QD= 10000 - 50P

11. What is the equilibrium price in this perfectly competitive market?

12. How much of the global metal supply will be produced in Africa?

3. Suppose the South American countries manage to improve their production processes

resulting in a 20% decrease in marginal cost. What will happen to the world equilibrium

price?

14. Suppose that in addition to all of the above information, Brazil experiences a mining

disaster, effectively eliminating 20% of its mining capacity (from 3000t to 2400t initially,

but at the 20% lower marginal cost). What will happen to the world equilibrium price?

Suppose that all of the above information holds with the exception of the information on

global demand for the metal. Suppose global demand has increased to QD= 16000 - 40P.

15. What will now happen to the global equilibrium price?

16. How much of the metal will now be produced worldwide?