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What are the implications of such a subsidy for economic efficiency and
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- Given: an inverse demand equation of P = 50 - 0.5Q, inverse supply equation of P = 0.333Q, a. What is the Consumer Surplus, Producer Surplus, and Total surplus after giving a subsidy of 10 (s=10) to sellers (inverse supply equation with subsidy: P = 0.333Q - s)? Calculate and illustrate through a graph. (TS after the subsidy - cost of subsidy) b. What happened to the CS, PS and TS after subsidy? Did it result to Deadweight Loss?Please in a simple explanation, describe and or explain elasticity, consumer surplus and producer surplus.The demand and supply functions for basic cable TV in the local market are given as: QD = 200,000 – 4,000P QS =20,000 + 2,000P. Determine the equilibrium price and quantity that will prevail in an unregulated market. Calculate the consumer surplus, producer surplus, and total surplus in this market. Is this market efficient? Why or why not? If the government implements a price ceiling of $15 on the price of basic cable service, what will be the quantity of cable service that will prevail in the market? Is there a surplus or a shortage, and if so, how much? With the new government policy, is there a deadweight loss in the market? If so, why is there a deadweight loss and how much is the deadweight loss? Are consumers better off or worse off with this policy? Are producers better off or worse off? Is society on the whole better off or worse off?
- As has happened in southern Chile with rains that generated heavy losses to agricultural sector, in case of potatoes, there has been a significant increase in their price. Government wants to establish a LEGAL MAXIMUM PRICE on potatoes. What are implications of this measure and how would it affect consumer and producer surplus? Justify and explain with graphs.Explain the efficiency implications of a selective tax on a commodity, using the consumer surplus approach and a diagram as part of your answer. Use a constant-cost, i.e., horizontal, supply curve.a tax of $10 per ton of coal causes the price, inclusive of the tax, to increase from $60 per ton to $63 perton, and the quantity to decrease from 540 million tons to 500 million tons. what is the loss of consumer surplus? Producer surplus?
- For years the government has subsidized higher education through grants; consider the demand and supply for college credit hours at a local private liberal arts collegeQD = 6,000 – 300PQS = 700P – 500 where P is the price, in hundreds of dollars, and Q is the number of credit hours per semester. Suppose the government subsidizes credit hours at a rate of $120 per hour. Calculate changes in consumer surplus. What is the size of the deadweight loss?What is the price firms receive after the tax is in placeThe market supply and demand for a product are shown in the diagram below. Is the price elasticity of supply less than one, equal to one, or greater than one? Explain. Calculate consumer surplus at the equilibrium price. Show your work. Now suppose the government imposes a per-unit tax of $1 on producers. What happens to total revenue received by producers after they pay the tax to the government? Explain. Will producer surplus increase, decrease, or stay the same? Will total surplus increase, decrease, or stay the same? Explain.
- Suppose the government imposes a tax of $20 million per month on cable producers. If Comcast wants to maximize its profit, what price per subscription should it charge per month?The market supply and demand for a product are shown in the diagram below. (a) Is the price elasticity of supply less than one, equal to one, or greater than one? Explain. (b) Calculate consumer surplus at the equilibrium price. Show your work. (c) Now suppose the government imposes a per-unit tax of $1 on producers. (i) What happens to total revenue received by producers after they pay the tax to the government? Explain. (ii) Will producer surplus increase, decrease, or stay the same? (iii) Will total surplus increase, decrease, or stay the same? Explain.1- Use the framework of demand and supply curves as described in picture to analyze the effects of subsidy on producers and consumers. - Who benefits more from subsidy and analyze different situations with respect to different elasticities.