Question 1 Read attachment 1. Assume that the markets for maize and petrol are perfectly competitive. a) According to the article, name the three headwinds faced by maize crop farmers. For each one, explain whether it is the demand or supply curve for maize that is likely to be affected. How is the equilibrium price and quantity of maize likely to change as a result of these three headwinds? Explain using the demand/supply model. b) How is Governor Branstads plan to promote the use of ethanol in vehicle fuel likely to change the market outcome? Explain using the demand/supply model. c) According to the article, why are petrol-refiners unhappy with Governor Branstads plan? How will this policy likely to affect the equilibrium price of petrol? Explain using the demand/supply model. Question 2 Read attachment 2. Assume that the market for land is perfectly competitive. a) According to the article, what is unique about the demand and/or supply curve for land in the cities? Explain. b) According to the article, what has happened to the demand and supply of land in recent years? Has there been a shift in the demand curve? Has there been a shift in the supply curve? What has happened to the value of land over time? Explain using the demand/supply model. c) The article states that a land tax is unlike other taxes (which distort economic activity) in that it cannot reduce the supply of land. Explain using the demand/supply model. Question 3 Read attachment 3. a) The article suggests that the government currently imposes a ceiling on the price of water in California. Show, using the demand/supply model, how this would result in the problem of scarcity of water mentioned in the article. How does this affect the welfare to society? b) It is stated in the article that markets and prices are an indispensable part of the tool kit to combat scarcity. Explain what this means. How can markets get rid of the scarcity of water? Show what the equilibrium price of water would be if the price ceiling were eliminated. c) According to the article, why is the government willing to maintain such low prices for water instead of letting the markets function? 2 d) According to the article, in addition to the scarcity problem, what other problems are created as a result of the governments policy? Question 4 Read attachments 4a and 4b. a) Using attachment 4a, analyse the decision to send ones child to tuition classes from a parents point of view. What is the marginal benefit of this decision? b) Would a parent who reads attachment 4b change his/her view about tuition? According to attachment 4b, what is the marginal cost of sending ones child to tuition classes? Explain how you would calculate the marginal cost. What is the marginal benefit? Question 5 Read attachment 5. Assume that the market for sugarcane is perfectly competitive. a) Consider the Chinese governments decision to turn migrant workers from Vietnam away. What is going to be the impact of this on the supply and equilibrium price of sugar in China? How will this affect the welfare of Chinese sugarcane producers? Explain using the demand/supply model. b) The article states that China became a net importer of sugar in recent years. What caused this change? How has this change affected the welfare of consumers and producers of sugarcane in China? Show graphically using the demand/supply model with international trade. (In answering this question, you can assume that in 1950s, the equilibrium price of sugarcane in China was equal to the world price. c) The article suggests that the Chinese government is helping the local sugarcane farmers by imposing import tariffs. How will such a policy affect the welfare of consumers and producers of sugarcane in China? What is the overall impact of the policy on the welfare of society? Explain using the demand/supply model with international trade. d) The article states that the government is also considering subsidies as a way to help the producers of sugarcane. Suppose the government uses subsidies instead of import tariffs to help the local farmers. Assume that China remains a net importer after the subsidies are implemented. Using the model of demand/supply with international trade, explain how such a policy will affect the consumers and producers of sugarcane in China. What is the overall impact of subsidies on the welfare of society? What Awaits you: On-time delivery guarantee Masters and PhD-level writers Automatic plagiarism check 100% Privacy and Confidentiality High Quality custom-written papers
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