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unvrs, Master's Degree
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Suppose that the supply schedule of Belgium Cocoa beans is

Customer Question

Suppose that the supply schedule of Belgium Cocoa beans is as follows:

Price of cocoa beans
(per pound) Quantity of cocoa beans supplied
(pounds)
$40 700
$35 600
$30 500
$25 400
$20 300


Suppose that Belgium cocoa beans can be sold only in Europe. The European demand schedule for Belgium cocoa beans is as follows:

Price of Belgium cocoa beans
(per pound) Quantity of Belgium cocoa beans demanded
(pounds)
$40 100
$35 300
$30 500
$25 700
$20 900


a. Draw the demand curve and the supply curve for Belgium cocoa beans. What are the equilibrium price and quantity of cocoa beans from Belgium?

Now suppose that Belgium cocoa beans can be sold in the U.S. The U.S. demand schedule for Belgium cocoa beans is as follows:

Price of Belgium cocoa beans
(per pound) Quantity of Belgium cocoa beans demanded
(pounds)
$40 200
$35 400
$30 600
$25 800
$20 1000

b. What is the demand schedule for Belgium cocoa beans now that U.S. consumers can also buy them?

Price of Belgium cocoa beans Quantity of Belgium cocoa beans demanded Quantity of Belgium cocoa beans demanded Total Demanded
(per pound) (pounds) (pounds) (pounds)
$40 200 100
$35 400 300
$30 600 500
$25 800 700
$20 1000 900


Draw a supply and demand diagram that illustrates the new equilibrium price and quantity of cocoa beans from Belgium.

What will happen to the price at which Belgium plantation owners can sell cocoa beans?



What will happen to the price paid by European consumers?


What will happen to the quantity consumed by European consumers?


Problem 2

On Tuesday nights, a local restaurant has a kid’s meal special. Nina’s son, Braden likes the restaurant’s chicken nuggets, but Braden seems to be growing bigger every day and the kid’s meal is usually not enough. The restaurant does allow for additional purchase of chicken nugget servings. Nina’s willingness to pay for each serving is shown in the table below.

Number of Chicken Nugget servings
(servings) Willingness to pay for chicken nuggets
(per serving)
1 $5
2 $4
3 $3
4 $2
5 $1
6 $0


a. If the price of an additional serving of chicken nuggets is $3, how many servings will Nina buy for Braden? How much consumer surplus does he receive?





b. The following week, Nina and Braden are back at the restaurant again, but now the price of a serving of chicken nuggets is $4. By how much does his consumer surplus decrease compared to the previous week?




c. One week later, they return to the restaurant again. Nina discovers that the restaurant is offering an “all-you-can-eat” special for $12. How many chicken nugget servings will Braden eat, and how much consumer surplus does he receive now?






d. Suppose you own the restaurant and Braden is a “typical” customer. What is the highest price you can charge for the “all-you-can-eat” special and still attract customers?
Submitted: 2 years ago.
Category: Multiple Problems
Expert:  unvrs replied 2 years ago.

unvrs :

Hi, Welcome to Just Answer. Would you please put your questions in a a word document? Thanks!

Customer :

Complete the following problem. Be sure to answer every part of the problem unless otherwise noted.

Unit 3 Homework (2 problems)

Problem 1:

Suppose that the supply schedule of Belgium Cocoa beans is as follows:

Price of cocoa beans (per pound)

Quantity of cocoa beans supplied (pounds)

$40

700

$35

600

$30

500

$25

400

$20

300

Suppose that Belgium cocoa beans can be sold only in Europe. The European demand schedule for Belgium cocoa beans is as follows:

Price of Belgium cocoa beans (per pound)

Quantity of Belgium cocoa beans demanded (pounds)

$40

100

$35

300

$30

500

$25

700

$20

900

  1. Draw the demand curve and the supply curve for Belgium cocoa beans. What are the equilibrium price and quantity of cocoa beans from Belgium?
    Now suppose that Belgium cocoa beans can be sold in the U.S. The U.S. demand schedule for Belgium cocoa beans is as follows:

Price of Belgium cocoa beans (per pound)

Quantity of Belgium cocoa beans demanded (pounds)

$40

200

$35

400

$30

600

$25

800

$20

1000

  1. What is the demand schedule for Belgium cocoa beans now that U.S. consumers can also buy them?

Price of Belgium cocoa beans

Quantity of Belgium cocoa beans demanded

Quantity of Belgium cocoa beans demanded

Total Demanded

(per pound)

(pounds)

(pounds)

(pounds)

$40

200

100


$35

400

300


$30

600

500


$25

800

700


$20

1000

900


Draw a supply and demand diagram that illustrates the new equilibrium price and quantity of cocoa beans from Belgium.

What will happen to the price at which Belgium plantation owners can sell cocoa beans?

What will happen to the price paid by European consumers?

What will happen to the quantity consumed by European consumers?

Problem 2

On Tuesday nights, a local restaurant has a kid’s meal special. Nina’s son, Braden likes the restaurant’s chicken nuggets, but Braden seems to be growing bigger every day and the kid’s meal is usually not enough. The restaurant does allow for additional purchase of chicken nugget servings. Nina’s willingness to pay for each serving is shown in the table below.

Number of Chicken Nugget servings (servings)

Willingness to pay for chicken nuggets (per serving)

1

$5

2

$4

3

$3

4

$2

5

$1

6

$0

  1. If the price of an additional serving of chicken nuggets is $3, how many servings will Nina buy for Braden? How much consumer surplus does he receive?
  2. The following week, Nina and Braden are back at the restaurant again, but now the price of a serving of chicken nuggets is $4. By how much does his consumer surplus decrease compared to the previous week?
  3. One week later, they return to the restaurant again. Nina discovers that the restaurant is offering an “all-you-can-eat” special for $12. How many chicken nugget servings will Braden eat, and how much consumer surplus does he receive now?
  4. Suppose you own the restaurant and Braden is a “typical” customer. What is the highest price you can charge for the “all-you-can-eat” special and still attract customers?

Customer :

Is this what you meant?

unvrs :

Thanks, It's much better. I'm going to work on it now. By the way, which textbook are you currently using?

Customer :

How long do you think it will be before you can have an answer for me? I need it by Sunday

Customer :

Title : Microeconomics, 2nd Edition

Authors : Paul Krugman and Robin Wells

unvrs :

I'll post you a solution by tomorrow.

Customer :

I am having a major problem with these graphs. I understand the concepts but the graphs are really throwing me through a loop and my professor doesn't seem to have time to help any of us

Customer :

Are you good with economics??? Could really use a tutor :)

unvrs :

Hmm... That's not good. Let me work on these problems first and I'll know what you are learning.
In economics, you need to understand when we shift the demand and the supply curves and the results of them.

Customer :

Yes you are right. Well, I will await your answer and hopefully we can talk more again. Thank you so much for your assistance I really appreciate it.

unvrs :

Sure. I am going to work on it now.

Customer :

Thank you. Have a good night and I will talk to you more tomorrow.

unvrs :

Here is my solution:
http://www.box.com/s/oc22hdv9nhp2fjmvq2fo

Thanks,

unvrs :

Alice

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unvrs
Lecturer of Mathematics
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CFA Level 2 Candidate