Due to increased awareness of the possible health benefits of vitamin C, the demand for oranges in Country Z increases by 60,000 per month at each price.
(d) Calculate the change in expenditure on imported oranges as a result of the increase in demand.
Old Imported Amount = 40,000
New Imported Amount after Change in Demand = 100,000 at $2 price
Change in Demand = 60,000
Change in expenditure = 60,000 x 2 = $120,000
(e) (i) Calculate the change in consumer surplus in Country Z as a result of the increase in the demand for oranges.
(ii) Calculate the change in social (community) surplus as a result of the increase in the demand for oranges.
Change on Producer Surplus = 0
Change in Consumer Surplus = 78,000
Change in Community Surplus = Change in CS + Change in PS = 78,000
(f) State one administrative barrier that Country Z could use is order to restrict imports.
·Requirements for packaging/labeling
·Health/safety inspection procedures
·Changes in permitted specifications for a product
·Increased bureaucracy
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