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Question: the world inverse demand for cotton is given by p...

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Problem 1 (5 points). The world inverse demand for cotton is given by p 150 Qd while the inverse supplies of the US and the rest of the world are given by p 30 Qu and p J 30 QR. Here the quantity is in thousands of tons and the price is in US dollars per ton. (a) Denote the world supply by Q5 Qiu QR. Calculate the world equilibrium quantity, Q and the world equilibrium price, p (b) Suppose the US government gives a $30 subsidy to US sellers for each ton sold The rest of the world has the same inverse supply as before. Find the new world equilibrium quantity, Q and the new world equilibrium price, p (c) What is the incidence of the subsidy on US sellers? How does the US subsidy impact sellers from the rest of the wor (d) What is the total subsidy amount spent by the US government?

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