- 16 In The U S The Market Demand And Supply Curves For Tomatoes Based Strictly On Domestic Production And Consumption 1 (88.14 KiB) Viewed 43 times
16. In the U.S., the market demand and supply curves for tomatoes based strictly on domestic production and consumption are given by the following equations: Demand: Q = 200 - 50P Supply: Q = -50 + 50P If the market is perfectly competitive and unregulated, the equilibrium price of tomatoes (P*) and the quantity of tomatoes (Q*) purchased in this market will be: a) p*=1.50, Q*=125. b) p*=2.00, Q*=100. c) P*=2.50, Q*=75. d) p*=3.00, Q*=50. e) indeterminate. 17. Following up on question 16: Suppose the U.S. begins importing tomatoes from Mexico. Specifically, after buying all the domestic tomatoes that are available at a "world price” of $1.50/unit, the U.S. market faces an infinitely elastic supply of imported tomatoes (at P=1.50). As a result of the availability of imported tomatoes: a) U.S. consumers will pay two different prices for their tomatoes. b) U.S. consumers will consume fewer tomatoes than they would without imports. c) Q=125 tomatoes will be imported. d) Q'=100 tomatoes will be imported. e) no domestic tomatoes will be consumed.