Business, 05.05.2020 22:11 pchaneh31

If the domestic demand curve is Equal 20p Superscript negative 0.5, the domestic supply curve is Equal 5p Superscript 0.5, and the world price is $7.00, use calculus to determine the changes in consumer surplus, producer surplus, and welfare from eliminating free trade. The change in consumer surplus (Upper DeltaCS) from eliminating free trade is $ nothing. (Enter your resp

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Answer from: nikeahbrown

$52

$ 1.33

consumer price will increase consumer surplus will decreaseimport will decrease reduced exportportends gloom for the general outlook for the economy

Explanation:

Given domestic demand curve, S(p) = 20p⁻⁰°⁵

the domestic supply curve S(p)= 5p⁰°⁵

world price is $7.00

using calculus to determine the changes in consumer surplus

by consumer surplus means in this case supply exceeds demand

we establish the equilibrium point where the supply and demand functions meet or are equal

solving 20p⁻⁰°⁵ = 5p⁰°⁵

20/5 = p⁰°⁵/p⁻⁰°⁵

4 = p⁰°⁵⁺⁰°⁵

4= p = q which is the quantity produced

consumer surplus = maximum price willing to pay - Actual price

= ∫⁴₀ dp dp - p* q

= ∫⁴₀20p⁻⁰°⁵ dp- 7* 4

= 20∫⁴₀p⁻⁰°⁵ dp -28

= 20/0.5 p⁰°⁵- 28

= 40 *4⁰°⁵ - 28 = $52

producer surplus = it is a measure of producer welfare. It is measured as the difference between what producers are willing and able to supply a good for and the price they actually receive

thus producer surplus = p* q - ∫⁴₀ d(s) dp

= 7 * 4 - ∫⁴₀ 5p⁰°⁵ dp

= 28 - 5 ∫⁴₀ p⁰°⁵ dp

= 28 -5 *2/3 p¹°⁵

= 28 -5 *2/3 4¹°⁵

=$ 1.33

welfare from eliminating free trade

consumer price will increase consumer surplus will decreaseimport will decrease reduced exportsportends gloom for the general outlook for the economy

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Answer from: Quest

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If the domestic demand curve is Equal 20p Superscript negative 0.5, the domestic supply curve is Equ...

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