Equilibrium price
Not what you're looking for?
The domestic demand for a firms product is Qd=500-1.5P. The supply function of the domestic firms is Qsd=50 + 0.5P, while that of the foreign firms is Qsf=250
a. determine the equilibrium price and quantity under free trade.
b. determine the equilibrium price and quantity when foreign firms are constrained by by a 100-unit quota.
c.Are domestic consumers better or worse off as a result of the quota?
d. Are domestic producers better or worse off as a result of the quota.
Purchase this Solution
Solution Summary
The solution answers the question below and goes into quite a bit of detail regarding the General Equilibrium Theory. The answer is ideal for students looking for a detailed analysis of the question asked below. An excellent response to the question being asked.
Solution Preview
a. Total Supply = Qsd + Qsf = 300+0.5P
Equilibrium Price is determined when Qd = Qs. Thus
500-1.5P = 300+0.5P
=> 200 = 2P
=> 100 = P
b. If ...
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.