Consider a market for rides (as in the market that Uber operates). Demand for rides is given by QD=120-2P. Supply of rides by drivers is given by Qs=10P. The equilibrium price in this market is The consumer surplus is The producer surplus is goes to drivers and some to Uber. The total surplus is ✓. Note that producer surplus is calculated in the standard way. Some of it Suppose now that Uber sets the price of a ride at $12. The quantity of rides in the market is now The consumer surplus is now The producer surplus is now Assuming Uber's revenue is 20% of ride revenue, their revenue at the equilibrium price is price of $12 is V V. (still calculated in the standard way). ✓and at a

Consider a market for rides (as in the market that Uber operates). Demand for rides is given by QD=120-2P. Supply of rides by drivers is given by Qs=10P. The equilibrium price in this market is The consumer surplus is The producer surplus is goes to drivers and some to Uber. The total surplus is ✓. Note that producer surplus is calculated in the standard way. Some of it Suppose now that Uber sets the price of a ride at $12. The quantity of rides in the market is now The consumer surplus is now The producer surplus is now Assuming Uber's revenue is 20% of ride revenue, their revenue at the equilibrium price is price of $12 is V V. (still calculated in the standard way). ✓and at a

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 27CTQ: During a discussion several year; ago on building a pipeline to Alaska to carry natural gas, the...

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During a discussion several year; ago on building a pipeline to Alaska to carry natural gas, the U.S. Senate passed a bill stipulating mat there should be a guaranteed minimum price for the natural gas that would flow through line pipeline. The thinking behind the bill was that if private firms had a guaranteed price for their natural gas, they would be more willing to drill for gas and to pay to build the pipeline. Using the demand and supply framework, predict the effects of this price floor on fine price, quantity demanded, and quantity supplied. With the enactment of this price floor for natural gas, what are some of the likely unintended consequences in line market? Suggest some policies other than the price floor that he government can pursue if it wishes to encourage drilling for natural gas and fur a new pipeline in Alaska.
Suppose that the demand for a concert is represented by the following equation, where P is the price of concert tickets and QD is the quantity of tickets demanded:QD = 2200 - 24PThe supply of tickets is represented by the equation where P is the price of the tickets and QS is the quantity of tickets supplied:QS = -500 +79PGive all answers to two decimals. 1. Find the equilibrium price and quantity of tickets sold. 2. Calculate the consumer surplus and producer surplus at the equilibrium price and quantity. Use the formula for the area of a triangle, (½ × base × height), to calculate each value.
Suppose the government of the island has decided to make tomatoes more affordable to consumers by imposing a fixed per unit subsidy. Thus, start with the original demand (Qd = 50 – 5P) and supply (Qs = 5P – 25) and analyze this new intervention, the subsidy. The subsidy works like this: tomato sellers receive a $4 refund from the government for each kilogram of tomatoes they sell to consumers. • Write down the equation for the new "effective supply" curve. • Determine the new equilibrium quantity and equilibrium price. • What is the price that the consumers will pay for their tomatoes? • What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? • How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) • Produce a new graph depicting the new, post-subsidy…
Suppose the government of the island has decided to make tomatoes more affordable to consumers by imposing a fixed per unit subsidy. Thus, start with the original demand (Qd = 50 – 5P) and supply (Qs = 5P – 25) and analyze this new intervention, the subsidy. The subsidy works like this: tomato sellers receive a $4 refund from the government for each kilogram of tomatoes they sell to consumers. Write down the equation for the new "effective supply" curve. Determine the new equilibrium quantity and equilibrium price. What is the price that the consumers will pay for their tomatoes? What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) Produce a new graph depicting the new, post-subsidy equilibrium…
Suppose the government of the island has decided to give consumers a more attractive price for tomatoes by imposing a fixed, per unit subsidy. Thus, start with the original demand (Qd = 450 - 100P) and supply (Qs = 50P) and analyze this new intervention, the subsidy. The subsidy works like this: each tomato seller receives a 3-dollar refund for each kilogram of tomatoes sold. Write down the equation for the new "effective supply" curve. Determine the new equilibrium quantity and equilibrium price. What is the price that the consumers will pay for their tomatoes? What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) Graphically depict the new equilibrium complete with (solved) values for the new…
Suppose the government is considering an increase in the toll on a certain stretch of highway from $.20 to $.40. At present, 80,000 cars per week use that highway stretch; after the toll is imposed, it is projected that only 75,000 cars per week will use the highway stretch. Assuming that the marginal cost of highway use is constant (i.e., the supply schedule is horizontal) and equal to $.20 per car, what is the change in social surplus attributable to the increase in the toll? (Hint: The toll increase will cause the supply schedule, not the demand schedule, to shift.) Calculate government revenues from the increased toll. A. $18,750 B. $37,500 C. $15,000 D. $1000
Suppose the demand and the supply for lumber (harvested wood processed in a sawmill) used for construction in Australia are given byQD =100 – 2PQS = 1/2PAssume also that the market is perfectly competitive. 7. Steel is a substitute for lumber in construction. Now suppose the price for steel rises. Use a graph of supply and demand to show what happens in equilibrium. Show changes relative to the original equilibrium you found. 8. back to the orginial graph once more, the government introduces a subsidy of s=5 per unit of lumber transacted in the market. Calculate the new equilibrium quantity and the price paid by consumers and received by producers.9. Given the subsidy in 8, calculate and illustrate in a graph the consumer surplus, producer surplus and subsidy expenditure.10. Calculate the deadweight loss caused by the subsidy in 8 and illustrate it in a graph. 11. Who benefits more from the subsidy, consumers or producers? Why?
Suppose the government of the island has decided to make tomatoes more affordable to consumers by imposing a fixed per unit subsidy. Thus, start with the original demand (Qd = 50 – 5P) and supply (Qs = 5P – 25) and analyze this new intervention, the subsidy. The subsidy works like this: tomato sellers receive a $4 refund from the government for each kilogram of tomatoes they sell to consumers. What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) Produce a new graph depicting the new, post-subsidy equilibrium complete with (solved) values for the new price and quantity. Please include the original supply curve in this graph, in addition to the new “effective supply” curve; and clearly label the shift…
Consider the market for outdoor porch swings. The following graph shows the supply and the demand curve of the good. Assume that the price of home and garden goods is regulated, and the price of outdoor swings cannot exceed Preg, also shown on the graph below. The letters A to K denote certain areas on the graph. What area represents the consumer surplus (CS) in the absence of any regulation? What about producer surplus (PS)? What about total (economic) surplus (TS)? Is there a deadweight loss (DWL) if the price is not regulated? If yes, what area represents this DWL?
Show all work please thanks D.) Now, according to this graph, how much is the consumer surplus when price is set below the equilibrium level at P=$5? (Use the area of a triangle and the area of a rectangle, length x length) E.) According to this graph, how much is the producer surplus when price is equal at P= $5? (use the area of triangle: Base x Height x 1⁄2) F.)In the graph, how much is deadweight loss at a price of $5? (use the area of a triangle) please show calculations so I know how to arrive at those numbers! Thank you
A study of a country's colleges and universities resulted in the demand equation q = 20,000 − 2p, where q is the enrollment at a public college or university and p is the average annual tuition (plus fees) it charges.† Officials at Enormous State University have developed a policy whereby the number of students it will accept per year at a tuition level of p dollars is given by q = 5,200 + 0.5p. Find the equilibrium tuition price p and the consumers' and producers' surpluses at this tuition level. What is the total social gain at the equilibrium price? HINT [See Example 3.] equilibrium tuition price p = $ consumers' surplus CS = $ producers' surplus PS = $ total social gain $
A study of a country's colleges and universities resulted in the demand equation q = 20,000 − 2p, where q is the enrollment at a public college or university and p is the average annual tuition (plus fees) it charges.† Officials at Enormous State University have developed a policy whereby the number of students it will accept per year at a tuition level of p dollars is given by q = 10,000 + 0.5p. Find the equilibrium tuition price p and the consumers' and producers' surpluses at this tuition level. What is the total social gain at the equilibrium price? equilibrium tuition price p = $ consumers' surplus CS = $ producers' surplus PS = $ total social gain $