Exhibit 8.13 Dollars per unit $10 6 D 5 100,000 120,000 200,000 Quantity per period Refer to Exhibit 8.13, which shows a perfectly competitive market. Area A represents O a. the floor. O b. a public good. O c. the consumer surplus. d. the ceiling. Oe. the producer surplus.
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- use diagramsa. What is the effect on the equilibrium price and quantity traded in market of theintroduction of a new technology that reduces costs of production for all firms?b. What is the effect on the equilibrium price and quantity traded in a market of a changein tastes that reduces the demand for the product?c. What is the effect on the equilibrium price and quantity traded in a market of theimposition of a tax per unit sold on suppliers?d. What is the effect on the equilibrium price and quantity traded in a market of thepayment of a subsidy per unit sold paid to suppliers?Think about a noncompetitive market inwhich you participate regularly. Explain whichcharacteristic(s) of competitive markets your market does not meeta. How would a sales tax in a competitive market affect the producer’s and the consumer’s surplus? b. Some people argue that the government should impose the tax on the producers rather than the consumers, so that the consumer’s welfare will not be reduced. Do you agree with this argument? Why or why not?
- (J) Suppose the production process of a particular good creates a negative externality such as pollution. Other things being equal, would society be better off if this good were produced by a perfectly competitive market or by a monopoly? a. Society would be better off if this good were produced by a perfectly competitive market, because a perfectly competitive market responds to consumers' desires in the long run b. Society would be better off if this good were produced by a perfectly competitive market, because a perfectly competitive market will produce the quantity where Marginal Revenue equals Marginal Cost c. Society would be better off if this good were produced by a monopoly,The market for pizza is characterized by adownward-sloping demand curve and an upwardsloping supply curve.a. Draw the competitive market equilibrium.Label the price, quantity, consumer surplus, andproducer surplus. Is there any deadweight loss?Explain.b. Suppose that the government forces eachpizzeria to pay a $1 tax on each pizza sold.Illustrate the effect of this tax on the pizzamarket, being sure to label the consumer surplus,producer surplus, government revenue, anddeadweight loss. How does each area compare tothe pre-tax case?c. If the tax were removed, pizza eaters and sellerswould be better off, but the government wouldlose tax revenue. Suppose that consumers andproducers voluntarily transferred some of theirgains to the government. Could all parties(including the government) be better off than theywere with a tax? Explain using the labeled areas inyour graphRefer to the accompanying figure. When this market is in equilibrium, total producer surplus in the market is Price ($/restaurant meal) 60 50 40 30 20 10 O 0 S D 5 10 15 20 25 30 35 40 45 50 Quantity (restaurant meals/day) per day. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.
- the Canadian-goverment is trying to decide between three(3) policies that affects the market of cigars.Policy One: a price support program for the Industry tobacco farmers Policy two: Label requirements and ADs marketing danger awareness warnings to the public.Policy three: a cap on no. of cases of cigars sold per-quarter at twentyfive thousand (25000)casesThe aim of the canadian government is to support farmers while reducing the consumpition of cigars.What combinations of policies should be enacted ? Indentify the right combination:(a) Policy one (b)Policy two (c)Policy three(d) Policy One and Two(e) Policy Two and Three(d) All Three PoliciesSelect Justification for the above selection(a) Reduce quanity of cigars consumed and increases price for tobacco(b)Reduce quanity of cigars consumed and increases price for cigars(C) Reduce quanity of cigars consumed and reduce price for tobacco(D)Reduce quanity of cigars consumed and reduce price for cigars7. Please shade the total surplus (consumer plus producer surplus) and explain Price 0 5 10 15 20 25 30 Demand 60 50 40 30 20 10 0 Supply 0 10 20 30 40 50 60Spain imports cigars from Cuba. The Spanish health ministry is worried about the negative effects of tobacco on passive smokers and is considering three different options for reducing tobacco consumption: A quota on cigar imports from Cuba, an import tariff on cigars, and a consumption tax.a) Using graphs analyze the welfare effects of the three policies. (While answering this question assume that the Spanish cigar industry operates under perfect competition.)b) In welfare terms, how would you classify the 3 policies?c) Which cabinet ministry would like to see a different classification in (b)? Why?
- 2. Consider a competitive market characterized by the following marketdemand and supply curves.Qd=10000-10P Qs=40P-2000If the government enacts a binding price floor at 500, calculate the resultingconsumer surplus, producer surplus, and deadweight loss.Hint: a diagram might help. Show your work.Marginal cost pricing in competitive markets results in which one of the following? A. The last unit produced in each market costs society exactly what the last customer to purchase the good values the good at. B. Invisible hand wides the free market to produce what is best for SOciety. C. Free markets produce an efficient mix of goods and services. D*. All of the above A B CD i will 5 upvotesa)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