he equations below represent the demand and supply curves for annual gym memberships in a certain city. qD= 500 − 2p, qs= 0.5p − 50 Assume that the city government offers a per-unit subsidy of $25 to those who sign up for an annual gym membership. a. Find the equilibrium pre and post subsidy. What share of the subsidy benefit accrues to the buyers? b. Do a welfare analysis comparing consumer surplus, producer surplus, and total surplus pre and post subsidy. Is there a deadweight loss associated with the implementation of this subsidy? Graph ypur answer

he equations below represent the demand and supply curves for annual gym memberships in a certain city. qD= 500 − 2p, qs= 0.5p − 50 Assume that the city government offers a per-unit subsidy of $25 to those who sign up for an annual gym membership. a. Find the equilibrium pre and post subsidy. What share of the subsidy benefit accrues to the buyers? b. Do a welfare analysis comparing consumer surplus, producer surplus, and total surplus pre and post subsidy. Is there a deadweight loss associated with the implementation of this subsidy? Graph ypur answer

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter3: Market Demand And Supply

Section3.A: Consumer Surplus, Proudcer Suplus, And Market Efficency

Problem 6SQ

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The equations below represent the demand and supply curves for annual gym memberships in a certain city. qD= 500 − 2p, qs= 0.5p − 50 Assume that the city government offers a per-unit subsidy of $25 to those who sign up for an annual gym membership. a. Drawing on your knowledge from chapters 2 & 3, find the equilibrium pre and post subsidy. What share of the subsidy benefit accrues to the buyers? b. Do a welfare analysis comparing consumer surplus, producer surplus, and total surplus pre and post subsidy. Is there a deadweight loss associated with the implementation of this subsidy? Sketch a graph, label all relevant intercepts and areas, and refer to those areas to in your answer instead of calculating the monetary value of all surpluses and changes.
Answer questions as either True or False. If the answer is false, explain why it is false. Question 6 Consumer surplus is the area above the demand curve but below price. Question 7 The producer surplus for a particular unit is equal to the vertical distance between price and the supply curve. Question 8 Social efficiency is an allocation of resources in which consumer and producer surplus are equal. Question 9 A deadweight loss results when resources are allocated in an unequal manner.
Suppose the demand and supply curves for good X are both linear. The demand price for the first unit of X is $28, and the supply price for the first unit of X is $6. If the equilibrium price for good X is $16 and the equilibrium quantity of X is 24,000 units, then total consumer surplus is $________, total producer surplus is $_________, and total social surplus is $_____________.
The market demand and supply equations for theme park in a city are given by P = 30 – 0.005QD and P = 10 + 0.005QS, where P is the price in dollars and QD is the quantity of theme-park tickets demanded and QS is the quantity of theme park ticket supplied. Given that the equilibrium price of theme park tickets is $20, equilibrium quantity of theme park tickets is 2000 and the consumer surplus is 10000 and producer surplus is 10000: Explain the implications of the welfare of consumers, producers and the society when the price of theme park ticket is fixed at $15. Support your answers with a graph of the theme park tickets market.
The market for Commodity A is competitive. The demand curve for Commodity A is: Q = 65 - 2 P. The supply curve for Commodity A is: Q = 21 + 2.5 P. To encourage production of Commodity A, the government is considering introducing a subsidy of $0.6 per unit. What is the market equilibrium quantity under the government subsidy?
A way to define an efficient market is one in which a. total surplus is minimized. b. deadweight loss is maximized. c. gains from trade are maximized. d. producer surplus alone is maximized. e. tax revenue is maximized.
Which of the following statements are true? a. Consumer surplus can be determined as the space between market price and supply curve. b. The supply curve reflects the willingness to pay of costumers. c. Producer surplus can be determined as the space between market price and supply curve. d. The demand curve reflects the willingness to pay of costumers.
This question doesn’t involve any numerical calculation. The USDA considers investing in R&D to make production less costly. The supply function of Cabbage is perfectly elastic. a. Draw the supply and demand for cabbage in the market before and after the investment in R&D.b. Mark with letters (A, B, C, D, …) the relevant intersections of the supply and demand curves and indicate what is the consumer surplus, what is the producer surplus, and what is the social surplus.
Assume the demand equation for a product is given by P=50-Q, while the supply curve is given by P=20+Q.a. Compute the consumers and producers surpluses at the laissez- faire market equilibrium price and quantity. b. Assume government sets a price ceiling of K30, what is the change in consumers and producers surpluses? c. What is the deadweight loss in welfare?
The demand and supply functions for box office movie rentals on satellite TV are given as: Qd =200 000 -4 000P and Qs = 20 000 + 2 000P 3.1 Calculate the consumer and producer surplus in this market. If the government implements a price ceiling of $15 on the price of rental service, calculate the new levels of consumer and producer surplus. Are all consumers better off? Are producers better off?
Compared to market equilibrium, when there is a shortage a - consumer surplus is decreased and deadweight loss is increased. b - producer surplus is decreased and deadweight loss is decreased. c - consumer surplus is increased and deadweight loss is decreased. d - producer surplus is decreased and deadweight loss is increased.
Take a market that fulfills the supply and demand model assumptions. Inverse demand is P = 32-.75Q and inverse supply is P = 8+.25Q. Find the equilibrium price, quantity, consumer surplus, producer, and total surplus.