P. 180 160 - a) Suppose a new law is implemented and the price floor in this market is set at $150. Supply 140 120 100 What will be the new consumer 80 surplus? b) What if the price floor is $100? 60 40 20 Denjand 10 20 30 40 S0 60 70 80 90 Q
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- Suppose the demand and supply of firearms in Jail are given as follows: Demand: P = 630 − 349Q Supply: P = 480 + 2Q in which Q is the quantity of firearms in million units and P is the price per each firearm in Jalian dollars. a. The equilibrium price is [ANS1] Jalian dollars and the equilibrium quantity is [ANS2] million units. b. Suppose the government purchases 10 million units of firearms back from the market. After the government enters the market, on the new demand curve, when the price is 555 Jalian dollars, the total quantity demanded is [ANS3] million units of firearms. c. Suppose the government wants to use such buyback program to reduce the quantity of firearms in the community to zero. The government will need to buy at least [ANS4] million units of firearms from the market and spend at least [ANS5] million dollars. d. Suppose the government wants to use taxation to reduce the quantity of firearms in the community to zero. The government will need to impose a…Consider a market where demand and supply satisfy the following equations QD = 12 – 2 P, QS = 2P. Find the current equilibrium price and quantity. 2What is the total producer surplus if the market is in equilibrium? The government is considering a minimum price policy to increase producer surplus. 3Explain by means of graphs how the introduction of a price floor can increase producer surplus. 4Find the (optimal) price floor that maximizes producer surplus.I would like to know just part d,e, and f. Thank you Suppose that the supply of tomato soup in a city is represented byQS = 100P – 10PT − 50where P is the price of tomato soup and PT is price of tomato needed to produce tomato soup. All prices are indollars and quantity is in liters.Assume that the current tomato price is $15.Suppose that the demand for the tomato soup is QD = 1000−60P + 0.3Iwhere P is the price of the tomato soup and I is a representative household’s income.Assume that at the equilibrium, income is $12000.a) What are the current equilibrium price and quantity of the tomato soup? Show the equilibrium on a detailedgraph.b) Suppose that income decreases to $10400. What is the new equation for the demand for tomato soup? Doesthis correspond to an increase or decrease in the demand for tomato soup? Show the effect of this event onthe equilibrium and the diagram you used in part (a)c) Start from the equilibrium in part a) and now suppose that the price of the tomato…
- Consider the market for ice cream cones. Suppose that supply in this market is given by ?? =?? and demand is given by ?? =30−4×??. Answer the following questions. a.) Suppose that the government is considering imposing a $4.00 price control as either a price ceiling or a price floor. Would this be a binding price control as a price floor or as a price ceiling? Will this cause a shortage or a surplus? Compute the size of the shortage or surplus that would result. b.) Suppose that instead of a price control, the government is considering imposing a $1.00 per ice cream cone tax in the market on producers. Compute the tax equilibrium quantity ???, the consumer effective price with the tax ??, the producer effective price with the tax ??, consumer tax incidence and producer tax incidence. c.) Notice that the competitive equilibrium (??,??) and the point (???,??) are both on the demand curve. Use them to compute the price elasticity of demand. d.) Notice that the competitive equilibrium…Q^d= 9.5 - 2p Q^s= 0.6p Tax. Suppose that the government imposes a tax equal to T = 0.50 which must be paid by buyers for every donut they purchase. (a) How does this tax change the supply and/or demand curve for donuts? (b) Solve for the new equilibrium price and quantity of donuts. Give the price paid by the buyer and the price received by the seller. (c) Draw a single supply and demand diagram that compares the equilibrium with and without the tax. Be sure to indicate the equilibrium quantity of donuts sold as well as the price paid by buyers and the price received by sellers in each case. On the same diagram, indicate the areas which represent consumer and producer surplus, tax revenue and the deadweight loss arising from this tax. (d) Calculate the amount of producer and consumer surplus at this new equilibrium price and quantity, as well as the amount of tax revenue and the deadweight loss. (e) Is total surplus higher than, lower than or the same as in question one? Give an…Q^d= 9.5 - 2p Q^s= 0.6p Tax. Suppose that the government imposes a tax equal to T = 0.50 which buyers must pay for every donut they purchase. (a) How does this tax change the supply and/or demand curve for donuts? (b) Solve for the new equilibrium price and quantity of donuts. Give the price paid by the buyer and the price received by the seller. (c) Draw a single supply and demand diagram that compares the equilibrium with and without the tax. Be sure to indicate the equilibrium quantity of donuts sold as well as the price paid by buyers and the price received by sellers in each case. On the same diagram, indicate the areas which represent consumer and producer surplus, tax revenue and the deadweight loss arising from this tax. (d) Calculate the amount of producer and consumer surplus at this new equilibrium price and quantity, as well as the amount of tax revenue and the deadweight loss. (e) Is the total surplus higher, lower, or the same as in question one? Give an…
- It is often argued that during periods of rapid demand expansion, when prices arerising, poor people should be protected from rising prices by imposing price controls on“necessities.” Analyze the short-run and long-run effect of imposing a maximum price belowthe equilibrium in a competitive market that is experiencing rising demand.a. Do price controls really protect poor people better than the operation of competitive markets does in the long run? Explain.b. Provide a numerical example.c. Provide a graph.2.2.4 Considering curves D and S, if the government intervenes and sets a price of R26, this Is called ........... .............. and will result in a ......................... of 40 cups of coffee. 2.2.5 Consider demand(D) and supply(S1). if the government sets a price of R18 for a cup of coffee, then the .............. .................... will be 140 cups of coffee1.Suppose that the supply and demand for sunglasses are p=0.8q+6 p=-1.2q+14 Where P is the price in dollars and Q is the quantity in hundreds. A. Find the supply and demand (to the nearest unit) if sunglasses are sold for $7each. Discuss the stability of the sunglasses market at this price. B. Find the supply and demand (to the nearest unit) if sunglasses are sold for $11each. Discuss the stability of the sunglasses market at this price. C. Find the equilibrium price and quantity.
- A market is described by the the supply and demand curves:Qs=2P QD=300-P a.Solve for the equilibrium price and quantity.b.If the government imposes price ceiling of $90,does a shortage or surplus or neither develop?What are the price, quantity supplied,quantity demanded,and size of the shortage or surplus?c.If the government imposes price floor of $90,does a shortage or surplus or neither develop?What are the price, quantity supplied,quantity demanded,and size of the shortage or surplus?d.Instead of a price control,the government levies a tax on producers of $30.As a result, the newpply curve is:Qs(2P-30).Does a shortage or surplus or neither develop?What are the price, quantity supplied,quantity demanded,and size of the shortage or surplus?Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. It is the explanation that is important. A1-1. Theoretically, taxes on the sales of sugary soft drinks are perfect; they reduce consumption dramatically and raise a lot of revenue. [Hint: Assume a per-unit tax and a horizontal supply curve for soft drinks.] A1-2. If the demand function for chicken is given by Qc = 100 – .25Pc + 10Pt + 100M, where Qc is the quantity of chicken demanded, Pc is the price of chicken, Pt is price of turkey, and M is the average income of consumers, then we can conclude that chicken has a downward sloping demand curve, is a substitute for turkey, and is a normal good. Please answer both and write neatly pleaseSuppose the demand and supply curves are described byMC = 1.11 + 0.89QWTP = 8.92 - 0.83QSuppose the price is 6.37.A. Given the price above, is there a shortage or a surplus? Surplus Shortage B. What is the value of the shortage or surplus? Only enter a positive number.
