ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
14th Edition
ISBN: 9781337912396
Author: Baumol
Publisher: CENGAGE L
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Chapter 11, Problem 5DQ
To determine
The price mechanism related with each of the inefficacies.
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In a market economy, what mechanism
determines the price and quantity of goods.
sold?
A) Government Regulations
B) Supply and Demand
C) Corporate Decision-Making
D) International Trade Agreements
(a) Assume that the markets for sugar cane, rum, and whiskey are initially in equilibrium (i.e., supply equals demand in each case). Assume further that a good harvest impacts the world’s sugar cane crop. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes for consumption.
(i) Discuss the impact of the good harvest on each of the three markets.
(ii) Discuss the effect on the markets for each of the three products if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers. How will this impact the revenues for sugar growers, rum producers, and whiskey producers?
(b) Identify a newspaper article that illustrates a market failure in your assigned Caribbean country. Ensure that you provide a screenshot of the article in your submission. NOTE: Only the following market failures should be examined: public good, asymmetric information, positive or negative…
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What will happen to the supply and demand curve, equilibrium price and quantity
of boots if price of leather used for making the shoes rises?
supply curve shift rightward; demand curve the same; equilibrium price increases;
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increases; equilibrium quantity decreases
supply curve shift leftward; demand curve the same; equilibrium price increases;
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Chapter 11 Solutions
ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
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