EBK MICROECONOMICS
2nd Edition
ISBN: 8220103679701
Author: List
Publisher: YUZU
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Question
Chapter 10, Problem 8P
(a)
To determine
Demand and supply curve.
(b)
To determine
(c)
To determine
The number of cell phones traded under the
(d)
To determine
The number of cell phones traded under the
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Hello, please help me with the following questions
What is the amount of shortage or surplus in the corn market as result of the price floor?
If the government agrees to purchase any surplus output at $12, how much will it cost the government?
If the government buys all of the farmers' output at the floor price, how many bushels of corn will it have to purchase and how much will it cost the government?
Which of the following is NOT a way that the government can intervene in markets?
a)The government can set minimum wages.
b)The government can raise taxes on a particular item.
c)The government can pass laws on sales taxes.
d)The government can stop the forces of demand and supply from working in markets.
The government often meddles in markets, using price ceilings and price floors and taxes which move the market away from free market equilibrium. Should the government meddle in markets? When should it meddle?
Should there be rent controls or other price ceilings?
Should the government set a minimum wage be $15?
Should the government control the price of life saving medicine, such as insulin? Should they set a price ceiling? Or use taxes?
How does elasticity of demand affect who will pay the tax?
What are some reasons that the government should meddle in markets using price controls and taxes?
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Similar questions
- Referring to Figure 8, assume the government does not fix the price of gasoline. What would happen to the price and quantity if demand also decreased instead of staying the same? a. The price would increase above P2, and the quantity would increase above Q2. b. The price would increase above P2, and the quantity would decrease below Q2. c. The price would decrease below P2, and the quantity would decrease below Q2. d. The price would decrease below P2, and the quantity would increase above Q2.arrow_forwardConsider a market that is initially in equilibrium and the equilibrium price and quantity are P and Q respectively. Then, the government decides to impose a price ceiling at a price of Pc that is less than P. Which of the following statements is correct? 1. After the price ceiling is imposed, the quantity demanded is less than the quantity supplied on the market. 2. After the price ceiling is imposed, the quantity actually sold in the market is lower than it was before the price ceiling was imposed. 3. Producer surplus in the market increased after the price ceiling was imposed. 4. Since Pc is less than P, the price ceiling is effective and therefore, there is no deadweight loss in the market.arrow_forwardQUESTION 1 (a) With aid of production possibility frontier, explain the concepts of scarcity, choice and opportunity cost. (b) Give an example of a price ceiling and an example of a price floor. Which causes a shortage of a good—a price ceiling or a price floor? Justify your answer with a graph.arrow_forward
- Q7. THINK LIKE AN ECONOMIST Can you think of at least one good reason that perhaps government should not interfere in market shortages with price-gouging laws? Your response should be 100 words or less.arrow_forwardWhich government policy measure would reduce the price of a product and increase the quantity traded in the market? Pick a,b,c or d a. The setting of a maximum price b. The setting of a minimum price c. The imposition of a tax d. The granting of subsidyarrow_forwardQuestion The below graph shows the market of air tickets per month with no Government intervention What are the Price and Quantity of Equilibrium? Calculate total Surplus at equilibrium. The government intervenes by setting a maximum price to be sold of 350$. What type of Price control is it? Who is it supposed to gain and lose from this intervention? Will this create a surplus or shortage? Calculatearrow_forward
- Using the following diagram (the equilibrium quantity is 5.5, the supply curve intersects the price axis at 3.5), answer these questions: a) If a tax of $2 were imposed, what price would buyers pay, and what price would suppliers receive? How much revenue would be raised by the tax? Compute the total consumer surplus, producer surplus, and welfare after the introduction of the tax. b) If a subsidy of $5 were imposed, what price would buyers pay, and what price would suppliers receive? How much would the subsidy cost the government? What would be the consumer surplus and the producer surplus? c) If the government imposed a binding price floor of $7 and compensated the producers by buying the excess surplus at the stated price: What would be the consumer surplus, the producer surplus, the government expenditures, and total welfare?arrow_forwardWhen a market is competitive and functioning properly, economic theory predicts that the market equilibrium will be efficient. However, this may not always be the desired outcome. Market outcomes may be unequal or distorted by market failure. Offer an example of a market where you consider the real-world outcome to be unacceptable. Why is the market outcome unacceptable? How can government policy improve on the market equilibrium? Will this solution create a surplus or shortage in the market according to economic theory? Explain. What effect will this solution have on consumer surplus, producer surplus, social surplus, and deadweight loss? Explain.arrow_forwardThe figure below illustrates the market for Washington apples after the government imposes a price floor of $20 per crate of apples How many crates of apples were sold before the price floor? million crates How many crates of apples will be demanded after a binding price floor is set? million crates How many crates of apples will be supplied after a binding price floor is set? million crates How many crates of apples will be sold after the price floor? million crates What is the size of the shortage or surplus? million cratesarrow_forward
- The graph attached shows the demand and supply in a market. (a) The equilibrium quantity is -------------- and the equilibrium price is -----------. (b) If the actual market price is set at $100 per unit, there will be a --------------- (shortage or surplus) of ____units in this market. (c) If government wants to use a price floor, it should choose a price of how much? (d) At that price floor how many units are going to be sold in this market?arrow_forwardWhat is market failure, and what kinds of things can lead to market failure? What is government failure? Can government failure lead to market failure? Review concepts like shortsightedness and rent seeking. What are the effects of government intervention in markets with some of the price regulations like price floors and price ceilingsarrow_forward
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