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BHM 101.3 - The demand and supply schedules for US wheat

Question # 00544483
Subject: Economics
Due on: 06/11/2017
Posted On: 06/11/2017 09:03 AM

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Part A: Answer the following questions.


Price

(dollar per tonne)


Quantity

demanded

(kilotonnes)


Quantity

supplied

(kilotonnes)


100

150

200

250

300

350

400


2,000

1,400

1,200

1,000

800

600

0


0

600

800

1,000

1,200

1,400

2,000


The table shows the demand and supply schedules for US wheat market.The US Farm Bill 2012 indicates that the domestic price of wheat will be set at $300 per tonne, which is above the market equilibrium level of $250 per tonne, in order to support for domestic wheat growers. At the market equilibrium, 1,000 kilo tonnes(Kt) are supplied.

(a) The US Farm Bill 2012 indicates that the domestic price of wheat is set at $300 per tonne, which is above the market equilibrium level of $250 per tonne, in order to support for domestic wheat growers. On a graph, show if it creates a shortage or a surplus in the market for wheat, and explain why and by how much.(2 marks)

(b) On a graph, explain how the price control in the US would change the consumer surplus, producer surplus, and deadweight loss in the domestic wheat market. Assume that the US does not trade wheat internationally. Also, calculate the changes in consumer surplus, producer surplus and deadweight loss. (Remember 1 kilo tonne = 1,000 tonnes)(8 marks)

Tags wheat schedules supply demand 0 wheat tonne domestic market surplus price 0 equilibrium support kilotonnes order level indicates kilo graph producer deadweight consumer marks explain 1 growers supplied quantity 2 farm 3 4 change

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