Suppose that the supply schedule of Indonesian Coffee beans is as follows of Ind

Question

Suppose that the supply schedule of Indonesian Coffee beans is as follows of Indonesian coffee beans suppli $4.00 $3.50 $3.00 $2.50 S2.00 6.000 5,000 4,000 3,000 2,000 Suppose that indonesian Coffee beans can be sold only in Brazil. The domestic Indonesian demand schedule for Indonesian Coffee beans is as follows: Price of Indonesian coffee beans (per Quantity of Indonesian coffee beans supplied pound) $4,00 $3.50 $3.00 52.50 $2.00 (pounds) 1,0c0 2.500 4,000 5.000 Below is the new Supply and Demand graph that illustrates the equlibrium price and quantity of indonesian Coffee beans. The first demand curve (D) shows the domestic demand and the second dermand curve (o+Cj shows the combined dermand curves for both Indonesian and Chinese demand for Indonesian coffee beans Indonesian Supply (S), Indonesian Demand (Dj, and combined Indonesian and Chinese Demand

Explanation / Answer

The new price will be where the blue curve (demand curve with taxation) intersects the red curve (supply curve). We see that the new price will be $ 3.50 per unit.

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