• January 29th, 2016

Assignment 1

Paper, Order, or Assignment Requirements

Global Business Operations

  1. A survey indicated that chocolate is American’s favorite ice-­‐cream For each of the following, indicate the possible effects on demand, supply, or both as well as equilibrium price and quantity of chocolate ice cream. (Please answer graphically!!)


  • A severe drought in the Midwest causes dairy farmers to reduce the number of milk-­‐producing cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream.
  • A new report by the American Medical Association reveals that chocolate does, in fact, have significant health
  • The discovery of cheaper synthetic vanilla flavoring lowers the price of vanilla ice cream.
  • New technology for mixing and freezing ice cream lowers manufacturers’ costs of producing chocolate ice cream.


  1. In a supply and demand diagram, draw the shift of the demand curve for hamburgers in your hometown due to the following events. In each case, show the effect on equilibrium price and quantity. (Please answer graphically!!)


  • The price of tacos
  • All hamburger sellers raise the price of their French fries.
  • Income falls in town. Assume that hamburger are a normal good for most people.
  • Income falls in town. Assume that hamburgers are inferior good for most people.
  • Hot dog stands cut the price of hot
  1. Consider the following demand and supply curves.


Demand: P = 200 – Q Supply: P = 100 + 3Q


  • Draw the demand and supply curves.
  • Find the equilibrium price and
  • Calculate the consumer surplus.
  • Calculate the producer
  • What is the social welfare?

Suppose that there is an international producer whose price is $120.


  • Will there be imports? How do you know that?
  • If there is import, how much do we import from this international producer?
  • What is the consumer surplus now?
  • What about the producer surplus?
  • Are we better off with this import? How do you know that?
  1. Suppose that, in Case B in table 2.5, the United States Exchanges 4W for $C with the United Kingdom. Textbook, Ch2. Q5 (P. 50)
  2. How much does the United States gain in terms of C?
  3. How much does the U.K. gain in terms of C?
  4. What is the range for mutually beneficial trade?
  5. How much would each nation gain in terms of C if they exchanged 4W for 6C instead?

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