1. Rank the following markets from that where price controls would cause the greatest disequilibrium between supply and demand down to those where controls would cause the smallest disequilibrium. A. 4 B. 1 C. 3 D. 2 - Rice in a poor country (elasticity of demand low; elasticity of supply low) - Airline travel in a rich country (elasticity of demand high; elasticity of supply high) - Veterinary services (elasticity of demand medium, elasticity of supply low) - Fashion (elasticity of demand high, elasticity of supply medium) 2. Rank these in terms of the price change with a sudden supply shortage. A. 2 C. 3 D 4 D

1. Rank the following markets from that where price controls would cause the greatest disequilibrium between supply and demand down to those where controls would cause the smallest disequilibrium. A. 4 B. 1 C. 3 D. 2 - Rice in a poor country (elasticity of demand low; elasticity of supply low) - Airline travel in a rich country (elasticity of demand high; elasticity of supply high) - Veterinary services (elasticity of demand medium, elasticity of supply low) - Fashion (elasticity of demand high, elasticity of supply medium) 2. Rank these in terms of the price change with a sudden supply shortage. A. 2 C. 3 D 4 D

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 10PA

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1. Rank the following markets from that where price controls would cause the greatest disequilibrium between supply and demand down to those where controls would cause the smallest disequilibrium. A. 4 B. 1 C. 3 D. 2 - Rice in a poor country (elasticity of demand low; elasticity of supply low) - Airline travel in a rich country (elasticity of demand high; elasticity of supply high) - Veterinary services (elasticity of demand medium, elasticity of supply low) - Fashion (elasticity of demand high, elasticity of supply medium) 2. Rank these in terms of the price change with a sudden supply shortage. A. 2 B. 1 C. 3 D. 4 - Rice in a poor country (elasticity of demand low; elasticity of supply low) - Airline travel in a rich country (elasticity of demand high; elasticity of supply high) - Veterinary services (elasticity of demand medium, elasticity of supply low) - Fashion (elasticity of demand high, elasticity of supply medium)
Q^d= 9.5 - 2p Q^s= 0.6p Tax. Suppose that the government imposes a tax equal to T = 0.50 which buyers must pay for every donut they purchase. (a) How does this tax change the supply and/or demand curve for donuts? (b) Solve for the new equilibrium price and quantity of donuts. Give the price paid by the buyer and the price received by the seller. (c) Draw a single supply and demand diagram that compares the equilibrium with and without the tax. Be sure to indicate the equilibrium quantity of donuts sold as well as the price paid by buyers and the price received by sellers in each case. On the same diagram, indicate the areas which represent consumer and producer surplus, tax revenue and the deadweight loss arising from this tax. (d) Calculate the amount of producer and consumer surplus at this new equilibrium price and quantity, as well as the amount of tax revenue and the deadweight loss. (e) Is the total surplus higher, lower, or the same as in question one? Give an…
Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium (i.e., supply equals demand in each case). Assume further that a good harvest impacts the world's sugar cane crop. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes in consumption. (i)Discuss the effect on the markets for each of the three products if thegovernment implements a price restriction in the sugar cane market with the aim of protecting the farmers. How will this impact the revenues for sugar growers, rum producers and whiskey producers?
Q^d= 9.5 - 2p Q^s= 0.6p Tax. Suppose that the government imposes a tax equal to T = 0.50 which must be paid by buyers for every donut they purchase. (a) How does this tax change the supply and/or demand curve for donuts? (b) Solve for the new equilibrium price and quantity of donuts. Give the price paid by the buyer and the price received by the seller. (c) Draw a single supply and demand diagram that compares the equilibrium with and without the tax. Be sure to indicate the equilibrium quantity of donuts sold as well as the price paid by buyers and the price received by sellers in each case. On the same diagram, indicate the areas which represent consumer and producer surplus, tax revenue and the deadweight loss arising from this tax. (d) Calculate the amount of producer and consumer surplus at this new equilibrium price and quantity, as well as the amount of tax revenue and the deadweight loss. (e) Is total surplus higher than, lower than or the same as in question one? Give an…
b) The government decides to impose a price floor $4.10. It does so by promising farmers that it will buy the amount of corn necessary to keep the price pegged at no less than $4.10 a bushel. In the figure above plot the price floor. c) With the price floor in place, what is the amount of corn consumed by private demanders? d) How much corn do farmers supply? e) Describe the effect of a price floor imposed on the corn producers.
1. Assume that the demand for cigarettes is Qd=1600-30P and the supply of cigarettes is Qs=1400+70P: a. Calculate the equilibrium price and quantity and show them on a supplyand demand diagram. b. Suppose the government levies a $2 tax for each unit of cigarettes sold.Draw this on the diagram and calculate the new equilibrium price andquantity. c. Calculate the price elasticity of demand given these two price andquantity points. Is the demand for cigarettes price elastic or inelastic onthis part of the demand curve? Interpret the elasticity in words (i.e. If theprices rises by 10%, by what percentage will consumption fall?) d. On a graph, identify the tax revenue generated by this tax. e. Indicate each area on the graph with a letter and show in a table theconsumer surplus and the producer surplus before and after the tax. Also,indicate the deadweight loss associated with this tax. f. If your policy advisor boss wanted you to provide him/her witharguments in favor of this cigarette…
Only typed answer and please don't use chatgpt (I)Consider the market for milk in Saskatchewan. If p is the price of milk (cents per litre) and Qis the quantity of litres (in millions per month), suppose that the demand and supply curves formilk are given by: Demand: p = 225 -15QD Supply: p = 25 + 35QS a.Assuming there is no government intervention in this market, what is the equilibrium price and quantity? Equilibrium Price = $165 Quantity = 4Liters b. Now suppose the government guarantees milk producers a price of $2 per litre and promises to buy any amount of milk that the producers cannot sell. What are the quantity demanded and quantity supplied at this guaranteed price? Please answer B.
5. Demand is given by QD = 6000 - 50P. Domestic supply is QS = 25P. Foreign producers can supply any quantity at a price of $40. A. If foreign producers can sell in the domestic market, what is the equilibrium price? What is the equilibrium quantity? How much is sold by domestic and foreign producers, respectively? B. Under domestic government pressure, foreign producers voluntarily agree to restrict their goods. What will happen to the price and quantity? What will happen to the amount that domestic producers supply? What will happen to revenues of domestic and foreign producers?
a)Explain, using a demand and supply diagram, what effect is likely to occur in a market if the government introduces a subsidy in the production of a good. b) What are the possible undesirable outcomes of a pure market economy? c) How would the knowledge of Price Elasticity of Demand and Price Elasticity of Supply be useful for a farmer? d) How does monopoly result in a dead-weight loss? Illustrate with diagram