Kindly need the answer of this question & elucidate 1) Wholesalers buy and sell
ID: 1146723 • Letter: K
Question
Kindly need the answer of this question & elucidate 1) Wholesalers buy and sell roses in containers that hold 120 stems. The table provides information about the wholesale market for roses in the UAE. The demand schedule is the wholesalers' demand and the supply schedule is the UAE rose growers' supply. Wholesalers can buy roses at auction in Aalsmeer, Holland, for US $125 per container. (10 marks) Quantity Demanded Quantity Supplied (millions of containers per year) Price (US $/container) 100 125 150 175 200 225 15 12 4 10 Required: a. Without international trade, what would the price of a container of roses be and how b. At the price in your answer to part (a), does the UAE or the rest of the world have a c. If UAE wholesalers buy roses at the lowest possible price, how many do they buy from many containers of roses a year would be bought and sold in the UAE? comparative advantage in producing roses? Explain. UAE growers and how many do they import?Explanation / Answer
(a) Without trade, equilibrium occurs when quantity demanded equals quantity supplied. This holds true when
Price = $175 and Quantity demanded = Quantity supplied = 6 million
(b) Since price in rest of the world is $125 which is lower than the equilibrium price in UAE, rest of the world has comparative advantage in producing roses.
(c) When (lowest possible) price is $125, Quantity demanded = 12 million and Quantity supplied = 2 million
So, UAE wholesalers buy 2 million roses from UAE growers and imports 10 million (= 12 million - million) roses.
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