Suppose the figure represents a local cattle market. What would be the effect on this market of the local governmentregulating a price ceiling of $0.80 per pound?2.40-The price ceiling is below the market equilibrium price.2.20-2.00-SupplyThe market would have athousand pounds. (Enter your response as a whole number.)1.80-1.60-E 1.40-* 1.20-8 1.00-8 0.800.60-0.40-Demand0.20-0.00+10 20 30 40 50. 60 70 80 90 100 11o 120Quantity (pounds in 1000s)

Price ceiling is that price which are lies below that level of prices which are determined by market…

Answered: Suppose the figure represents a local…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 10PA

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Use the accompanying graph to answer these questions. a. Suppose demand is D and supply is S0. If a price ceiling of $6 is imposed, what are the resulting shortage and full economic price? b. Suppose demand is D and supply is S0. If a price support of $12 is imposed, what is the resulting surplus? What is the cost to the government of purchasing any and all unsold units? c. Suppose demand is D and supply is S0 so that the equilibrium price is $10. If an excise tax of $6 is imposed on this product, what happens to the equilibrium price paid by consumers? The price received by producers? The number of units sold? d. Calculate the level of consumer and producer surplus when demand and supply are given by D an respectively. e. Suppose demand is D and supply isb.
Let the market demand be D (p) = 10-p and market supply be S(p) = p. a. Find the output and price in the equilibrium.. b. Find the Consumers' Surplus and Producers' Surplus. c) Find the Consumers' Surplus and Producers' Surplus and Deadweight Loss when the government implements a price floor p = 6.The government imposes a per-unit tax t = 2. d. Find the output and price in the equilibrium. e. Find the tax incidence on the buyer and the seller. f.Find the Consumers' Surplus and Producers' Surplus andDeadweight Loss.
Consider a market that is perfectly competitive and has no externalities. Which, if any, of these government interventions would lead to deadweight loss from preventing surplus generating transactions from occuring? (a) A subsidy (b) A tax (c) A binding price floor (d) A binding price ceiling.
Suppose the equilibrium quantity in the market for baby formula is 1,000 per month when there is no tax. Then a tax of $0.50 per bottle is imposed. The effective price paid by buyers increases from $2.50 to $2.90 and the effective price received by sellers falls from $2.50 to $2.40. The government’s tax revenue amounts to $475 per month. Which of the following statements is correct? A. After the tax is imposed, the equilibrium quantity of diapers is 900 per month. B. The demand for diapers is more elastic than the supply of diapers. C. The deadweight loss of the tax is $12.50. D. The tax causes a decrease in consumer surplus of $380.
Consider the market for ice cream cones. Suppose that supply in this market is given by P^S = Q^S and demand is given by P^D = 30 - 4Q^D. Answer the following question. 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.
1. Given the following information Qd= 240 – 5p Qs= P Where Qd is the quantity demanded, Qs is the quantity supplied and P is the price. What is the equilibrium quantity before the tax? 2. Given the following information Qd = 240 – 5p Qs= P Where Qd is the quantity demanded, Qs is the quantity supplied and P is the price.Suppose that the government decides to impose a tax of $12 per unit on sellers in this market. What would be the demand and supply equation after tax? 3.Given the following information Qd= 240 – 5p Qs= P Where Qd is the quantity demanded, Qs is the quantity supplied and P is the price.Suppose that the government decides to impose a tax of $12 per unit on sellers in this market. What is the buyer’s price after tax? 4. Given the following information Qs= 240 – 5p Qd = P Where Qd is the quantity demanded, Qs is the quantity supplied and P is the price.Suppose that the government decides to impose a tax of $12 per unit on sellers in this market. What is the seller’s…
21-24. The market for concert tickets to see the pop singer Pink has the following supply and demand curves: Supply: P = 20 + 0.0015Q Demand: P = 500 – 0.0025Q Initially, the market is in equilibrium at P = $200, Q = 120,000. Questions 21 to 24 concern this market. 21. The government places a $35 per unit tax on the buyers of concert tickets. At the new equilibrium, the price paid by buyers (including the tax paid and to the nearest cent) will be: A) $200 B) $201.67 C) $205 D) $235 E) $205.83 F) $221.88 G) $186.88 H) $165 I) $278.13 J) None of the above 22. Now suppose that the government alters its policy so that the $35 per unit tax is now placed on the sellers of concert tickets instead of on the buyers. Economic theory tells us the following: A) the buyers’ share and the sellers’ share are reversed by the change in policy B) the buyers’ share and the sellers’ share are not affected by the change in policy C) the shares are affected by the change in policy, but exactly how depends…
Consider the market for ice cream cones. Suppose that supply in this market is given by P^S = Q^S and demand is given by P^D = 30 - 4Q^D. Answer the following question. 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 P^D, the producer effective price with the tax P^S, consumer tax incidence and producer tax incidence.
Suppose the market for grass seed (p is the price of grass seed) can be expressed as Demand: QD = 100 - 2p Supply: QS = 3p Find the market equilibrium price and quantity for grass seed. If government imposes a $5 specific tax to be collected from sellers, what is the price consumers will pay? How much tax revenue is collected? What fraction of the tax is paid by consumers? What fraction of the tax is paid by producers?
Suppose that the government enacts a tax on retail sales of road salt, which homeowners and businesses put on walkways and driveways. Assume that the supply of salt is perfectly elastic, due to the ease with which suppliers can stockpile the product.Before the tax, 900 fifty-pound bags of road salt are sold at an equilibrium price of $7 per bag. After the tax, 775 bags are sold at $8 per bag. How much revenue does the tax generate for the government? What is the amount of the tax? $
Suppose the market demand for organic grass-fed beef is given by Q=100-2P and the supply is given by Q= P/2 (quantity is given in thousand pounds). A) Find the equilibrium price of a pound of beef and the equilibrium quantity. B) Find the consumer surplus (CS) and producer surplus (PS) at the market equilibrium point. C) How will the equilibrium change if the government imposes a price ceiling of $20/pound? D) Show this market with the price ceiling in a supply and demand graph. E) Consider that the consumers who bought the beef at $20/pound are the ones with the highest willingness to pay (scenario 1), what is the new consumer surplus (CSnew) and the new producer surplus (PSnew)? F) What is the deadweight loss (DWL) after the price ceiling in scenario 1? G) What would happen in this market if, instead, the consumers who bought the beef were the ones with the lowest willingness to pay (scenario 2)? (Hint: You don’t have to show it mathematically, or graphically, but write…
The market for cookies is represented by the following supply and demand conditions: QD =1,000 – 200P and QS = 400P – 200, where P is the £ price per box of cookies and Q measures boxes per day. Suppose the government places a quota on cookies of 500 boxes per day. Solve for the equilibrium price and quantity and then use supply and demand curves to illustrate your answer. Calculate consumer surplus before and after the quota. Calculate producer surplus before and after the quota. Calculate the deadweight loss (excess burden) from the quota.

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