CEC2 532 Lecture Notes - Lecture 12: Diminishing Returns, Excise, Economic Equilibrium
17 Apr 2015
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Quantity increases, there is no change on quantity all others factors remaining constant. The equilibrium price increases, there is no change on quantity since all other factors remain constant. The equilibrium price decreases, quantity does not change since all other factors have remained constant. Since two factors are affecting the market at the same time the equilibrium cannot be determined. P = 50 + 0. 125 q, a) b) c) d) e) 50 + 0. 125 q = 200 - 0. 25 q. Q = 400 (000s) tons per month, or. Tr = p x q = 100 x 400,000 = $ 40,000,000. Q = 480 x 1,000 = 480,000 tons. The outcome will be a (qs qd) surplus of 480,000 360,000 = 120,000 tons per month: if a quota is set then. Q = 360,000 tons per month, then qs = 360. P = 200 - 0. 25 ( 360 ) P = 200 - 90 = $ 110 per ton d)
