12 . Problems and Applications Q10 A market is described by the following supply and demand curves: QSQS  =  =  3P3P QDQD  =  =  400−P400−P   The equilibrium price is   and the equilibrium quantity is   .   Suppose the government imposes a price ceiling of $80. This price ceiling is    , and the market price will be   . The quantity supplied will be   , and the quantity demanded will be   . Therefore, a price ceiling of $80 will result in    .   Suppose the government imposes a price floor of $80. This price floor is    , and the market price will be   . The quantity supplied will be   and the quantity demanded will be   . Therefore, a price floor of $80 will result in    .   Instead of a price control, the government levies a tax on producers of $40. As a result, the new supply curve is: QSQS  =  =  3(P−40)3P−40   With this tax, the market price will be   , the quantity supplied will be   , and the quantity demanded will be   . The passage of such tax will result in    .

Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter4: Supply And Demand: An Initial Look
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12 . Problems and Applications Q10

A market is described by the following supply and demand curves:
QSQS  =  =  3P3P
QDQD  =  =  400−P400−P
 
The equilibrium price is
 
and the equilibrium quantity is
 
.
 
Suppose the government imposes a price ceiling of $80. This price ceiling is    , and the market price will be
 
. The quantity supplied will be
 
, and the quantity demanded will be
 
. Therefore, a price ceiling of $80 will result in    .
 
Suppose the government imposes a price floor of $80. This price floor is    , and the market price will be
 
. The quantity supplied will be
 
and the quantity demanded will be
 
. Therefore, a price floor of $80 will result in    .
 
Instead of a price control, the government levies a tax on producers of $40. As a result, the new supply curve is:
QSQS  =  =  3(P−40)3P−40
 
With this tax, the market price will be
 
, the quantity supplied will be
 
, and the quantity demanded will be
 
. The passage of such tax will result in    .
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