Why the government wants to keep the price at higher level

Assignment Help Econometrics

Reference no: EM13243491

A. If we examine the market for rice in Pakistan during theyear 2007 and 2009, the demand of rice was higher in the year 2007 but it fell downduring the year 2009, due to the drop in the export demand of rice. But the Government wants to keep the price of rice at higher level. The given equations show the quantity demanded and quantity supplied of rice during the year 2007.

Year 2007: Demand: Qd = 1,600 - 125P
Year 2007 Supply: Qs = 440 + 165P

a. Calculate the market clearing price level andquantity in the year 2007, in that year there were no effective limitations on the production of rice.

b. Why the government wants to keep the price athigher level i.e. to $5.50 when there is decline in export demand. Will it effect on the
quantity demanded or quantity supplied equation and curve andhow much?

c. Now with the help of new quantity equationcalculate what should be the quantity of rice which the government must buy?

B. Suppose a profit-maximizing monopolist is producing 800units of output and is charging a price of $70 per unit. If the marginal cost of last unit produced is 50 what will be theelasticity of demand for the product?

Reference no: EM13243491

Questions Cloud

Calculate coefficient of determination : What is the explained variation? What is the mean square error and calculate the Coefficient of Determination and the Adjusted coefficient of Determination and Test for the overall usefulness of the model using F-Statistic at 5% and 1% significance..

Explain a sorbose sample containing of carbon atoms : Sorbose, C6H12O6, is used in making vitamin C. A sorbose sample containing 96.0 g of carbon atoms also contains ____ g of hydrogen atoms.

Explain a sample of xenon gas collected : A sample of xenon gas collected at a pressure of 189 mm Hg and a temperature of 290 K has a mass of 110 grams. The volume of the sample is

How much work is done by the engine in each cycle : An engine absorbs 1.67 kJ from a hot reservoir at 277°C and expels 1.18 kJ to a cold reservoir at 27°C in each cycle, How much work is done by the engine in each cycle

Why the government wants to keep the price at higher level : Why the government wants to keep the price athigher level i.e. to $5.50 when there is decline in export demand. Will it effect on the quantity demanded or quantity supplied equation and curve and how much

Explain methane gas has a volume : A 7.75 gram sample of methane gas has a volume of 876 milliliters at a pressure of 3.42 atm. The temperature of the CH4 gas sample is. answer in C please.

Determine the direction of the net electrostatic force : Charge q1 = 5.47*10^-8 is placed at the origin. Charges q2 =-1.45*10^-8 C and q3 = 1.95*10^-8 C, Determine the direction of the net electrostatic force on charge q3

Define what is the total volume of gaseous products formed : What is the total volume of gaseous products formed when 82.4 liters of carbon monoxide react completely according to the following reaction? (All gases are at the same temperature and pressure.) carbon monoxide (g) + water (l)------- carbon dioxi..

Find the vertical deflection of the end of the rod : A horizontal aluminum rod 4.8 cm in diameter projects 5.6 cm from a wall. A 1200 kg object is suspended from the end of the rod. Find the vertical deflection of the end of the rod

User Account

All Pages