The U.S. Department of Agriculture guarantees dairy producers that they will receive at least $1.00 per pound for butter they su
pply to the market. Below is the current monthly demand and supply schedules for wholesale butter (in millions of pounds per month). Market for Wholesale Butter Price (dollars per pound) Quantity of Butter Demanded (millions of pounds) Quantity of Butter Supplied (millions of pounds) $0.80 107 63 0.90 104 71 1.00 101 79 1.10 98 87 1.20 95 95 1.30 92 103 1.40 89 111 1.50 86 119 1.60 83 127 1.70 80 135 1.80 77 143 Instructions: Round your answer for price to 2 decimal places. Enter your answers for quantity as a whole number. a. What are the equilibrium price and quantity in the wholesale butter market? P = $ Q = million pounds b. What is the monthly surplus created in the wholesale butter market due to the price support (price floor) program? 22 million pounds Zero 79 million pounds 11 million pounds Suppose that a decrease in the cost of feeding cows shifts the supply schedule to the right by 40 million pounds at every price. c. Fill in the new supply schedule given the change in the cost of feeding cow
1 answer:
Answer:
1. Equilibrium price ,p = $1.20 per pound, equilibrium quantity = 95 million pounds.
2. Surplus = 0
Explanation:
1. From the question,
the equilibrium price = 1.20
The equilibrium quantity = 95 million per pounds.
Equilibrium is gotten when Quantity supplied = quantity demanded.
2. When price floor == $1.00
Quantity demanded = 101
Quantity supplied = 79
Monthly surplus = 79 - 101 = -22
Quantity demanded > quantity surplus.
This implies that there is no surplus.
Surplus = 0
3. If a decrease in cost of feeding cows shift supply by 40 million we will have new supply schedule =
New qs = Qs + 40
63+40 = 103
71+40= 111
79+40 = 119
87+40= 127
95 + 40 = 135
103 + 40 = 143
111+40 = 151
119 + 40 = 159
127 + 40 = 167
135 + 40 = 175
143 + 40 = 183
You might be interested in
Answer:
For better visualization, the answer is presented in a table
Procedure details described below:
Explanation:
<em>Opened a business bank account for Jones, Inc., with an initial deposit of $45,000 in exchange for common stock. </em>
The cash is an asset for the company And Jones Is the Owner thus, asset and equity increase by 45,000
<em>Paid rent on the office building for the month, $2,000. </em>
The rent is an expense is an incurred cost to continue the operations of the business It decreases the equity and asset (cash used to pay the rent)
<em>Received cash for fees earned of $5,000. </em>
The fees are revenue from the business operations this is a realized gain, therefore, increases equity. Also, Assets increase as cash is an asset.
<em>Purchased equipment, $7,000.</em>
There is no change in the quantities but, the composition of the asset did change. Cash decrease while equipment increase.
<em>Borrowed $20,000 by issuing a note payable. </em>
The note payable is a future obligation to pay. It is a liability for the company assumed in exchange for an asset (cash)
<em>Paid salaries for the month, $1,000. </em>
Like rent, this is an incurred cost(expense) It decreases Equity also, assets as we use cash to pay it.
<em>Received cash for fees earned of $8,000.</em>
Exactly like the previous time, a realized gain generates an increase in equity and assets.
<em>Paid dividends, $3,000.</em>
The dividends are paid to the company's owners thus, the cash leaves the company into the owner's pocket. Both, assets and equity decrease (as there are fewer assets available for the owners to take)
<em />
<em>Paid interest on the note, $100.</em>
The interest also is an incurred cost thus, like salaries and rent expense we decrease equity and assets.