Question: a closed economy 10 pointsandnbspthe demand and the supply...

A - Closed Economy (10 points):

 

The demand and the supply for broccoli[1] in Veganstan’s closed economy are given by

 

Q_D = 60 – 2P, and

Q_S = 38P.

 

We assume the market is perfectly competitive.

 

1: Compute the closed economy equilibrium price P^CE and quantity Q^CE.                         

2: Plot on a graph: the demand, the supply, and the equilibrium price and quantity.           

3: Using the demand and supply graph/diagram, analyse the impact on the equilibrium price and quantity, under each one of the following scenarios:

a)     a hailstorm damages the crop;                                                                          

b)     a new type of manure becomes available, which increases the yield per acre;     

c)     a hailstorm damages the crop while at the same time a new type of manure becomes available.