Economic Analysis for Business Decisions Sugar Surplus - Edubirdie

University:
Massachusetts Institute of Technology
Course:
15.501/516 | Accounting
Academic year:

2023
Views:

58

Pages:

2
Author:

henclitigwaq

Consumer Surplus and the Sweetener Quota Analysis P cents/lb Supply 21.8 A3 E 11.3 A1 D A2 B1 11.0 B2 F C Demand 4.6 8.1 8.6 24.3 38.6 44.3 Where: Q bil/lbs A1 – Domestic Producer Surplus (above 11) for producers who would produce at prices of 11.0 or below. A2 – Domestic Producer Surplus for producers who only would produce between 11.0 and 11.3. A3 – Domestic Producer Surplus for producers who only would produce at prices of 11.3 and above. B1 – Excess Cost (above 11) for Domestic Producers who would produce at prices between 11 and 11.3. B2 – Excess Cost (above 11) for Domestic Producers who would produce at prices of 11.3 and above. C – Consumer surplus (loss) for demand with marginal valuations between 11 and 21.8, at world price of 11. D – Profits to Foreign Producers from selling at US price of 21.8 instead of world price of 11. E – Profits on HFCS F – Excess Cost of HFCS production, above world sugar price of 11. Calculations B1 = 0.5*(0.3*0.5) = .075 billion cents = $ 0.75 million = $ 750 thousand A1 = 10.8*4.6 = 49.7 billion cents = $ 497 million A2 = 10.8*0.5 - B1 = 5.33 billion cents = $ 53.3 million E = 15.7*10.5 = 164.9 billion cents = $ 1,649 million F = 15.7*0.3 = 4.7 billion cents = $ 47 million A3 = 0.5*(14.3*10.5) = 75.1 billion cents = $ 751 million B2 = 14.3*10.8 - A2 = 79.3 billion cents = $ 793 million D = 10.8*3.5 = 37.8 billion cents = $ 378 million C = 0.5*(5.7*10.8) = 30.8 billion cents = $ 308 million A = A1+A2 = $ 1,300 million B = B1+B2 = $ 794 million change in CS = (A+B+E+F+D+C) = 10.8*38.6 +C = 334+23 = $ 4.475 billion. change in PS = A+E = $ 2.949 billion •Revenue to importers = D = $ 378 million •Deadweight loss = B+F+C = $ 1,149 million

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