Suppose the graph shows the market of wheat. The equilibrium price is $25 per 100 bushels of wheat. To support Incomes of farmers, the government imposes a price floor of $35 per 100 bushels. What is the resulting producer surplus at $35 per 100 bushels? + Price 50 45 40 35 30 25 20 15 10 100 200 300 400 500 600 700 800 Quantity Multiple Choice $5,000 $7,000 $14,000 $4,000

Suppose the graph shows the market of wheat. The equilibrium price is $25 per 100 bushels of wheat. To support Incomes of farmers, the government imposes a price floor of $35 per 100 bushels. What is the resulting producer surplus at $35 per 100 bushels? + Price 50 45 40 35 30 25 20 15 10 100 200 300 400 500 600 700 800 Quantity Multiple Choice $5,000 $7,000 $14,000 $4,000

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 1CQQ

See similar textbooks

Similar questions

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…
Draw a graph that shows the agricultural market in equilibrium with a binding price floor. Label equilibrium price, equilibrium quantity, and changes in consumer surplus, producer surplus, and deadweight loss on the graph. Is this prioce floor guaranteed to make producers better off?
A market is described by the following supply and demand curves:Supply: P=0.25QDemand: P=300-0.75Q(a) Solve for the equilibrium price and quantity and calculate the total economic surpluswith a diagram.(b) Suppose government sets a price floor of $90. With the price regulation, calculatewith a diagram the sizes of shortage (or surplus), consumer surplus, produce surplusand deadweight loss.(c) Instead of a price floor, government regulates the price by a price ceiling of $90.Predict the change of market efficiency if the government imposes a price ceiling of$90.(d) Instead of a price control, government levies a $20 excite tax on producers. Formulatethe new supply curve and solve for the new equilibrium price and quantity. Calculatewith a diagram the tax revenue and the tax incidences for both producers andconsumers. Discuss how buyers and sellers share the tax burden by applying relevanttheories and an appropriate diagram.
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. the government introduces a subsidy of s=5 per unit of lumber transacted in the market. Calculate the deadweight loss caused by the subsidy and illustrate it in a graph. Who benefits more from the subsidy, consumers or producers? Why?
In an effort to reduce alcohol consumption, the government is considering a tax$1 for every gallon of liquor sold (tax imposed on manufacturers). Supposethe demand curve is Q D = 500,000 - 20,000 P (where Q D is the number of gallons of drinkliquor demanded and P is the price per gallon), and the liquor supply curve isQ S = 30,000 P (where Q S is the number of gallons supplied).a. Calculate how the tax affects the price paid by consumers and the price paidaccepted by the manufacturer.b. What is the tax revenue for the government? How much incomecome from consumers, and how much from producers?c. Suppose the demand for liquor is more elastic for younger drinkers thanolder drinker. Will the liquor tax be more, less, or the sameeffective in reducing alcohol consumption among young drinkers?Explain.
39) A student wrote: "A production quota is inefficient because it results in overproduction. At the quota quantity, marginal social cost is equal to the market price and marginal social benefit is less than the market price, so marginal social cost exceeds marginal social benefit." If you were the instructor, how would you correct this statement? 40) When the government passes a law making a particular good illegal, does it matter for the black market price and quantity if the penalties for breaking the law are imposed on the buyers or on the sellers? 41) In 1920 a constitutional amendment was passed that outlawed the production, sale, purchase, and consumption of alcoholic beverages. "Prohibition" encouraged bootlegging and black markets for whiskey, wine, and beer. The amendment was eventually repealed in 1933. In 1920, what alternative economic policy was available to the government as a means of reducing alcohol consumption nationwide?
Suppose that weekly demand for loaves of bread (in thousands) is given by P = 10 – Q, and supply is given by P = 0.25Q. On a graph, show the market equilibrium price and quantity. Calculate producer and consumer surplus at the market equilibrium. Suppose that the government believes that the price is too high and decides to impose a price ceiling of $1. Demonstrate the new equilibrium quantity on your graph. Calculate the new producer and consumer surplus at the ceiling price.
Q4. Assume the market of non-medical masks can be described by the following equations: Demand: QD= 20 - P Supply: QS=2P-10 Where the quantity QP and QS are in millions, and price P is in dollars. Suppose all the masks are imported, and government decided to set a quota at 5 million units. a) Compute the pre-quota equilibrium price and quantity and illustrate your answers graphically. b) In your graph of a) Clearly show the con umer surplus (CS) and producer surplus (PS) before and after the quota. c) Show the dead weight loss (DWL) in the graph and calculate it.
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.