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puteri [66]
3 years ago
9

12. the market for rice in an east asian country has demand and supply given by Qd = 28 -4P and Qs = -12 + 6P, where quantities

denote millions of bushels per day. a. if the domestic market is perfectly competitive, find the equilibrium price and quantity of rice. Compute the triangular areas of consumer surplus and produces surplus. b. now suppose that there are no trade barriers and the world price of rice is $ 3. Confirm that the country will import rice. Find Qd, Qs and the level of import, Qd - Qs. show that the country is better off than in part ( a ), by again computing consumer surplus and producer surplus.
Business
2 answers:
poizon [28]3 years ago
7 0

Answer: The country is better off than in part a

Explanation:

Given the equation

Qd= 28- 4P

Qs= -12 + 6P

At equilibrium Qd = Qs

28-4P=-12 +6P

Collect like terms

28 + 12 = 6P + 4P

40 = 10 P

Divide both sides by 10

40/10 10P/10

4 = P

P = 4

Substitute the value of P into equation 1 and 2 to determine the equilibrium quantity

28 - 4 (4)

28 - 16

= 12

- 12 + 6 (4)

-12 + 24

=12

Therefore equilibrium price is $4 , equilibrium quantity is 12

To calculate consumer surplus and producer surplus

At price equilibrium price of $4, the producer is willing to supply at the price of $6, we can calculate the consumer surplus by using the formula for the area of triangle( 1/2 base* height

Base = 12

Height = 6

1/2*(12)*(6-4)

= 6*2

= 12

Since commodity price is $4 ,. Therefore any amount above the Market price of $ 4 represents the consumer surplus.

The producer surplus is the gain derived from the consumer by the producer.

Since the producer supply at price $6,

To calculate producer surplus since equilibrium price is $4, and quantity is 12

We can use the formula for area of a triangle to calculate producer surplus

1/2 base* height

Base = 12

Height=6

1/2*(12)*(6-4)

= 6*2

= 12

(B ) Suppose that there is no trade barrier and the price is $3 find Qd, As and level of import Qd-As

To calculate Qd, we use equation 1

28 - 4 ( 3)

= 28- 12

= 16

To calculate Qs, we use equation 2

-12 +6 (3)

-12 + 18

= 6

To calculate the level of import Qd - Qs

16 - 6

= 10

At price equilibrium price of $4, the producer is willing to supply at the price of $6, we can calculate the consumer surplus by using the formula for the area of triangle( 1/2 base* height

Base = 12

Height = 6

1/2*(12)*(6-4)

= 6*2

= 12

Since commodity price is $4 ,. Therefore any amount above the Market price of $ 4 represents the consumer surplus.

The producer surplus is the gain derived from the consumer by the producer.

Since the producer supply at price $6,

To calculate producer surplus since equilibrium price is $4, and quantity is 12

We can use the formula for area of a triangle to calculate producer surplus

1/2 base* height

Base = 12

Height=6

1/2*(12)*(6-4)

= 6*2

= 12

(B ) Suppose that there is no trade barrier and the price is $3 find Qd, As and level of import Qd-As

To calculate Qd, we use equation 1

28 - 4 ( 3)

= 28- 12

= 16

To calculate Qs, we use equation 2

-12 +6 (3)

-12 + 18

= 6

To calculate the level of import Qd - Qs

16 - 6

= 10

To calculate consumer surplus

1/2 base*height

1/2*16( 4-3)

8*9

8

=8

To calculate producer surplus

1/2 base* height

1/2 6( 4-3)

3*1

3

miv72 [106K]3 years ago
4 0

Answer:

a. The equilibrium price is 4 and the equilibrium quantity is 12 units.  

The producer surplus is 12, the consumer surplus is 18 units, and the total economic surplus is 30.  

b. At the world price of $3, the quantity demanded will 16 units and the domestic quantity supplied will be 6 units. The quantity imported will be 10 units.  

3. The producer surplus is 3, the consumer surplus is 32 units, and the total economic surplus is 35.  

The total surplus is higher after the trade, this implies that the country is better off.  

Explanation:

The demand equation is given as:

Qd = 28 - 4P

The supply equation is given as:  

Qs = -12 + 6P

At equilibrium, the quantity demanded is equal to quantity supplied.

Qd = Qs

28 -4P = -12 + 6P

28 + 12 = 6P + 4P

40 = 10P

P = 4

Putting the value of P in demand equation,

Qd = 28 - 4P

Qd\ =\ 28\ -\ 4 \ \times\ 4

Qd = 28 - 16

Q = 12

So, the equilibrium price is 4 and equilibrium quantity is 12.  

Now, we can find the Y excerpt of the demand curve by assuming Q as 0

Qd = 28 - 4P

0 = 28 - 4P

P = 7

Similarly, we can find the Y excerpt of the supply curve

Qs = -12 + 6P

0 = -12 + 6P

P = 2

The producer surplus is the difference between the market price and the supply curve

The producer surplus

= \frac{1}{2}\ \times\ base\ \times\ height

= \frac{1}{2}\ \times\ 12\ \times\ (4-2)

= 12

The consumer surplus

= \frac{1}{2}\ \times\ base\ \times\ height

= \frac{1}{2}\ \times\ 12\ \times\ (7-4)

= 18

The total economic surplus

= Consumer surplus + Producer surplus

= 18 + 12

= 30

So, the producer surplus is 12, the consumer surplus is 18, and the total economic surplus is 30.  

b. There are no trade barriers and the world price is $3.  

Since the world price is lower than the domestic price, the country will import rice from abroad.  

At price $3, the quantity demanded will be,

Qd = 24 - 4\ \times\ 3

Qd = 24 - 12

Qd = 16

At price $3, the quantity supplied by the domestic producers is,

Qs = -12 + 6\ \times\ 3

Qs = -12 + 18

Qs = 6  

So, the quantity imported will be,

Qd - Qs = 16 - 6 = 10

The producer surplus

= \frac{1}{2}\ \times\ base\ \times\ height

= \frac{1}{2}\ \times\ 6\ \times\ (3-2)

= 3

The consumer surplus

= \frac{1}{2}\ \times\ base\ \times\ height

= \frac{1}{2}\ \times\ 16\ \times\ (7-3)

= 32

The total economic surplus is  

= Consumer surplus + Producer surplus

= 32 + 3

= 35  

So, the producer surplus is 3, the consumer surplus is 32, and the total economic surplus is 35.  

We see that the total economic surplus is higher after the trade. This means that the country is better off with trade.

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Meena Chavan Corp's computer chip production process yields DRAM chips with an average life of 2,000 hours and s = 120 hours. Th
AnnZ [28]

Answer: a.)Cp= 1.25 ; b.) process is very capable ; c.) 0.83 ; d.) does not meet requires specification.

Explanation:

Given the following ;

Average chip life = 2000 hours

Standard deviation = 120 hours

Tolerance upper specification limit = 2600 hours

Tolerance lower specification limit = 1700 hours

A.) process capability ratio (Cp) :

Cp = (Upper specification limit - Lower specification limit) ÷ 6(standard deviation)

Cp = (2600 - 1700) ÷ (6 × 120)

Cp = 900 ÷ 720 = 1.25

B.) Capability ratio of 1.25 demonstrated that it is very capable.

C.) process capability ratio index(Cpk) :

Mean (X) = (Upper specification limit(US) - Lower specification limit(LCL))

Mean(X) = 2000

Lower Cpk = (X - LSL) ÷ 3(standard deviation)

Lower Cpk = (2000 - 1700) ÷ (3 × 120)

Lower Cpk = 300 ÷ 360 = 0.83

Upper Cpk = (USL - X) ÷ (3 × Standard deviation)

Upper Cpk = (2600 - 2000) ÷(3×120)

Upper Cpk = 600 ÷ 360 = 1.67

Cpk = Minimum_of (Upper Cpk, Lower Cpk)

Cpk = Minimum_of (1.67,0.83)

Cpk = 0.83

D.) Cpk < 1.0, shows that it does not meet required specification.

3 0
3 years ago
Read 2 more answers
7.37 For the net cash flow series, (a) determine the number of possible i* values using the two sign tests, (b) find the EROR us
nlexa [21]

Answer:

The answer is 25.19% .

Note: The values were not stated for the net series cash flows, during my research and i found the complete question and solved it.

Explanation:

<em>From the question given,</em>

<em>The first step is to make use of a table for the net cash flow series</em>

<em>Year                      1                  2                3              4             5             6</em>

<em>Net cash flow    $4100   $2000         $7000         $12000  $700       $800</em>

<em>Then,</em>

<em>Solution : MIRR is defined as modified internal rate of return, It accounts for the positive cash flows with reinvestment by using re-investment rate and negative cash flows are calculated at their present values to keep the fund aside by using finance rate. </em>

<em> As given also reinvestment rate = 20% and finance cost rate = 10%. </em>

<em> Now, from the table given of cash flows, we will calculate the future value of all cash flows in year 6. </em>

<em> FV = 4100*(1+0.20)^5 + 12000*(1+0.20)^2 + 800*(1+0.20)^0 = $28282.11 </em>

<em> Now,</em>

<em> By applying the rate of   we will computer teh PV of -ve cash flows : </em>

<em> PV = -2000/(1+0.1)^2 + -7000/(1+0.1)^3 + -700/(1+0.1)^5 = -$7346.73 </em>

<em> Now MIRR can be calculated by using the formula , MIRR = \√[n]{FV(positive cash flows/PV of negative cash flows)}-1 = \√[6]{28282.11/7346.74)}-1 </em>

<em> MIRR = 1.2519-1 = 0.2519 or 25.19% </em>

<em> Therefore, the only value Possible = 25.19% in this case.</em>

5 0
3 years ago
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermin
const2013 [10]

Question not complete

Direct Labour Cost is missing

Direct Labor Cost ----- $50,000.00 $270,000.00

Answer:

a.

Overhead Rate (Cutting Department) = $5.5 per machine hour = $5.5 per machine hour

Overhead Rate (Finishing Department) = $12.2 per labour hour

b. Total Manufacturing Cost = $644

c. Yes

Explanation:

a. Compute the predetermined overhead rate to be used in each department.

Given

Cutting Department

The Cutting Department bases its rate on machine-hours

Manufacturing Overhead Costs = $264,000

Machine Hours = 48,000

Finishing Department

The Finishing Department bases its rate on direct labor-hours.

Manufacturing Overhead Costs = $366,000

Direct Labour Cost = $270,000

Overhead Rate (Cutting Department) = Manufacturing Overhead Cost/Machine Hours

Overhead Rate (Cutting Department) = $264,000/48,000

Overhead Rate (Cutting Department) = $5.5 per machine hour

Overhead Rate (Finishing Department) = Manufacturing Overhead Cost/Machine Hours

Overhead Rate (Finishing Department) = $366,000/$270,000

Overhead Rate (Finishing Department) = 1.36

Overhead Rate (Finishing Department) = 136% direct labour cost

b.

The Cutting Department bases its rate on machine-hours

Given

Machine hours = 80 machine hours

Overhead Rate = $5.5 per machine hours ------ Calculated

The Finishing Department bases its rate on direct labor-hours.

Given

Direct Labour Cost = 150

Overhead Rate = 136% labour cost ------ Calculated

Overhead Applied (Cutting Department) = 80 * 5.5

Overhead Applied = 440

Overhead Applied (Finishing Department) = 136% * 150

Overhead Applied = $204

Total Overhead Applied = $440 + $204

Total = $644

c. Yes

If they use a plantwide rate based on direct labor cost and if the jobs has longer machine hours and small amount of labor cost they will be charged less overhead cost.

6 0
3 years ago
EB12.
mote1985 [20]

Answer:

The cost assigned to Job 7 at the end of the week is 5,700 dollars.

Explanation:

In job order costing the cost that is to be assign to a specific order is sum of actual direct material cost and actual labour cost require to perform that job. Factory overheads are also added to the job cost on the basis of allocation method (on basis of budgeted applied OH rate).

So Following costs will be assign to Job 7.

RAW materail = $ 700

Labor Cost     = $ 3000

Overhead      = $ 2000 (10* 20)

Total Cost    = $ 5700

4 0
3 years ago
Product B has revenue of $39,500, variable cost of goods sold of $25,500, variable selling expenses of $16,500, and fixed costs
Kay [80]

Answer:

We should discontinue Product B

Explanation:

We should check if Product B generates a contribution or not:

We subtract from the sales revenues the variable cost:

revenue                                   39,500

variable cost of goods sold   (25,500)

variable selling expenses   <u>   (16,500) </u>

Contribution                              (2,500)

<em>As the contribution is negative, we should discontinue </em>Product B as is less expensevely to stop production than continue.

3 0
3 years ago
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