Answer:
North American Free Trade Agreement (NAFTA)
Demand Schedule for Wheat in the new North American Market
(Number in billions of bushels of wheat, demanded per year)
Price Canada U.S Mexico North American market
$10 6 25 5 36
8 9 28 7 44
6 11 32 9 52
4 13 35 12 60
Explanation:
a) Data and Calculations:
Demand Schedule (number in billions of bushels of wheat)
Price Canada U.S Mexico North American market
$10 6 25 5 36
8 9 28 7 44
6 11 32 9 52
4 13 35 12 60
b) The result shows the aggregate demand of bushels of wheat in the three markets when they become a single market. This large market size will encourage wheat farmers to produce and supply more wheat and even reduce the price to $4 per bushel in order to reach the equilibrium demand of 60 billion bushels of wheat per year. This huge market will engender economic growth in the market for wheat and its related industries.
0.4 cross price elasticity of demand means that there is direct effect of change of price of wool socks on the demand of shaved ice but they are not very closely related to each other.
<u>Explanation:</u>
Cross Price elasticity of demand is the concept in Economics which focuses on the effect of change of price of one good leading to the change of the demand of the other good, but in this matter, the other things have to kept the same which is also known as ceteris paribus.
For example when the price of coffee increases, the demand of tea will increase because the people will start preferring to have tea because of the increase in the price of coffee.
Answer:
Departmental wage expenses for Dept. Y = 8,750 and Dept. Z = 10,250.
Explanation:
Direct wages of Y and Z sum 2,000 + 3,500 = 5,500. The remaining expenses are the difference between total wage expense and direct wage expenses. That means indirect expenses are 19,000 - 5,500 = 13,500. These has to be allocated half for each department.
- Dept Y expense is 2,000 + 13,500/2 = 2,000 + 6,750 = 8,750
- Dept Z expense is 3,500 + 13,500/2 = 3,500 + 6,750 = 10,250
Answer:
$1,200
Explanation:
The reason is that out of $5,200, $4,000 is the amount that Penelope receives as capital asset proceeds as this $4,000 reduces the insurance policy worth by $4,000. Hence it is insurance policy proceeds and is exempt from tax. The remainder $1,200 is interest earnings per year which must be included in the gross income for current year as it is taxable income.
Answer: An individual cartel member has an economic incentive to sell more than its quota, thus cheating on the cartel agreement. However, if all cartel members sell more than their quotas, the cartel price will fall, and profits will vanish
Explanation: A cartel is defined as group of businesses or nations that collude to limit competition within an industry or market. Thus, a major purpose of a cartel is to drive up price and profits thus restricting market output. This restriction however, requires cartel members to sell no more than their given quotas which provides individual cartel member with economic incentives to sell more than its quota resulting in cheating and a breach of cartel agreement. This leads to a fall in cartel price and vanishing profits should all members sell above their quotas which is a direct contradiction to the purpose of cartels.