ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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**Russia and France Chocolate Trade Analysis**

Russia trades chocolate with France, where chocolate is considered a staple. The Russian government has implemented a price floor for chocolate (a level above the equilibrium price). As a result, a surplus is created, with the government purchasing 4 excess units from producers. This surplus is then sold in France. Use the graph provided to analyze the market implications when Russia sells this excess chocolate on the world market (specifically to France).

### Market Analysis

**Question:**
What price should the Russian government charge to sell four units of chocolate in France? Provide your answer rounded to the nearest whole number.

**Graph Explanation:**

The graph titled "Market for chocolate in France" illustrates the supply and demand curves for chocolate, measured by price and quantity (in units).

- **Price Axis (vertical):** Ranges from $0 to $10.
- **Quantity Axis (horizontal):** Ranges from 0 to 10 units.

**Supply Curve (Red):**
- Begins at $2 for 2 units and rises linearly to $10 for 10 units.

**Demand Curve (Blue):**
- Starts at $10 for 0 units and decreases linearly to $2 for 8 units.

**Equilibrium Point:**
- The intersection of the supply and demand curves occurs at $6 for 6 units of chocolate.

**Government Intervention:**
- Given the surplus of 4 units, the Russian government should evaluate the demand curve to determine an optimal price point for selling these units in France.

Please enter the price in the provided box: $ ___

The goal is to match these 4 units with demand in the French market, ensuring competitive pricing that maximizes revenue while addressing market conditions.
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Transcribed Image Text:**Russia and France Chocolate Trade Analysis** Russia trades chocolate with France, where chocolate is considered a staple. The Russian government has implemented a price floor for chocolate (a level above the equilibrium price). As a result, a surplus is created, with the government purchasing 4 excess units from producers. This surplus is then sold in France. Use the graph provided to analyze the market implications when Russia sells this excess chocolate on the world market (specifically to France). ### Market Analysis **Question:** What price should the Russian government charge to sell four units of chocolate in France? Provide your answer rounded to the nearest whole number. **Graph Explanation:** The graph titled "Market for chocolate in France" illustrates the supply and demand curves for chocolate, measured by price and quantity (in units). - **Price Axis (vertical):** Ranges from $0 to $10. - **Quantity Axis (horizontal):** Ranges from 0 to 10 units. **Supply Curve (Red):** - Begins at $2 for 2 units and rises linearly to $10 for 10 units. **Demand Curve (Blue):** - Starts at $10 for 0 units and decreases linearly to $2 for 8 units. **Equilibrium Point:** - The intersection of the supply and demand curves occurs at $6 for 6 units of chocolate. **Government Intervention:** - Given the surplus of 4 units, the Russian government should evaluate the demand curve to determine an optimal price point for selling these units in France. Please enter the price in the provided box: $ ___ The goal is to match these 4 units with demand in the French market, ensuring competitive pricing that maximizes revenue while addressing market conditions.
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