4. MRT of food for clothing (rate at which clothing is reduced to increase food production by 1 unit) is 3 and MRS of food for clothing (rate at which consumers reduce clothing to increase food consumption by 1 unit) is ½, which market has excess supply and which market has excess demand. Show graphically how equilibrium is restored (

4. MRT of food for clothing (rate at which clothing is reduced to increase food production by 1 unit) is 3 and MRS of food for clothing (rate at which consumers reduce clothing to increase food consumption by 1 unit) is ½, which market has excess supply and which market has excess demand. Show graphically how equilibrium is restored (

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 10PA

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The demand and supply functions for good x are: QD = 780 – 2Px – 6Py + 0.02M QS = 200 + 4Px – 5Pr – 2W Currently, Py = 100, M = 5,000, Pr = 40, and W = 100 -What is the slope of the inverse demand curve? -What is the equilibrium market price of good x? -If the government imposes a price floor of $100 in the market, how much of good x is NOT sold in the market? -If the government agrees to buy all of good x that is not sold in the market (as a result of the $100 price floor), what does this cost the government, and ultim
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7. Consider the maker for gasoline. a. Start in Equilibrium (be sure to label all relevant points) b. Change at least one of the ceteris paribus conditions. Because of persistent budget deficits, Georgia politicians propose an increase in the taxes on gasoline sales. c. Examine the changed incentive. Which curve(s) has(have) changed? Why? (i.e. – which of the ceteris paribus conditions have changed?) _______________________________________________________ d. Identify the change(s) in direction, and draw into the above market. e. Finish in equilibrium. What are the effects on price and quantity?
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please show all workingQuestion 1 (a) Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey.Rum and whiskey are substitutes in consumption. The government implements a price restriction in the sugar cane market with the aim of protecting the farmers.(i) What type of price restriction is implemented by the government? Explain. (ii) Discuss the effect on each market if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers. (iii) Illustrate the effect on each market if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers.