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# 3. Suppose that the supply schedule of Brazilian Coffee beans is as follows:

Price of Brazilian Coffee beans

(per pound)

Quantity of Brazilian Coffee beans supplied

(pounds)

\$4.00

6,000

\$3.50

5,000

\$3.00

4,000

\$2.50

3,000

\$2.00

2,000

Suppose that Brazilian Coffee beans can be sold only in Brazil. The domestic Brazilian demand schedule for Brazilian Coffee beans is as follows:

Price of Brazilian Coffee beans

(per pound)

Brazilian Quantity of Brazilian Coffee beans demanded

(pounds)

\$4.00

1,000

\$3.50

2,500

\$3.00

4,000

\$2.50

5,000

\$2.00

7,000

a.   From the supply and demand schedules above, what are the equilibrium price and quantity of Brazilian Coffee beans? (3 points)

Now suppose that Brazilian Coffee beans can also be sold in Canada. The Canadian demand schedule for Brazilian Coffee beans is as follows:

Price of Brazilian Coffee beans

(per pound)

Canadian Quantity of Brazilian Coffee beans demanded

(pounds)

\$4.00

1,000

\$3.50

2,500

\$3.00

3,000

\$2.50

5,000

\$2.00

5,500

b.   Complete the following table by inserting the total Brazilian Coffee beans demanded by both the Brazilians and Canadians at each price (the combined (total) demand schedule for Brazilian Coffee beans). (5 points)

Price of Brazilian Coffee beans

Canadian Quantity of Brazilian Coffee beans demanded

Brazilian Quantity of Brazilian Coffee beans demanded

Total Brazilian Coffee Demanded

(per pound)

(pounds)

(pounds)

(pounds)

\$4.00

1,000

1,000

\$3.50

2,500

2,500

\$3.00

3,000

4,000

\$2.50

5,000

5,000

\$2.00

5,500

7,000

Graph 2.b. depicts the change in supply and demand of Brazilian Coffee beans.

c.   From the supply schedule and the combined Canadian and Brazilian demand schedule, what will be the new price at which Brazilian coffee growers can sell Brazilian Coffee beans? (5 points)

d.   With the Brazilian coffee growers selling to both the Canadians and the Brazilians, what price will be paid by Brazilian consumers? (6 points)

e.   With the Brazilian coffee growers selling to both the Canadians and the Brazilians, what will be the quantity consumed by Brazilian consumers? (6 points)

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