Question

Japan trades butter with Turkey, where it is a staple. The government of Japan places a price floor on their market for butter (assume that it is binding). They buy the surplus of 4 units from the producers and sell it in Turkey. Refer to-the graph to determine what happens when the government then sells the excess on the world market (to Turkey). What should the government of Japan charge in order to sell four units of butter in Turkey? Round your answer to the nearest whole number. Market for batier in Turkey Classify the seenarios according to whether consumers and producers are better off or worse off.

Answer 1

The government of Japan should charge the market price in Turkey to sell butter. Consumers and producers in Japan benefit, while producers in Turkey may be worse off due to increased competition.

Step-by-step explanation:

In order to sell four units of butter in Turkey, the government of Japan should charge a price that is equal to the market price in Turkey. This is because if the price charged by the government is higher than the market price, consumers in Turkey would not be willing to purchase the butter, leading to a surplus. On the other hand, if the price charged is lower than the market price, producers in Turkey would not be willing to sell their butter to the government, resulting in a shortage.

When the government of Japan sells the excess butter on the world market to Turkey, consumers in Turkey would be better off because they can purchase the butter at a lower price than before. Producers in Japan would also be better off because they can sell their surplus butter and earn additional revenue. However, producers in Turkey may be worse off because they will face increased competition from the imported butter, which may put pressure on their sales and profit margins.