Microeconomics: Private and Public Choice (MindTap Course List)
15th Edition
ISBN: 9781285453569
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 11, Problem 9CQ
To determine
The taxi license permit system in the economy.
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Students have asked these similar questions
When Adam Smith talked about “the invisible hand” he argued that:
High transaction costs normally prevent markets from achieving equilibrium.
Prices, in the long run, end up where both fairness and efficiency are achieved.
Changing prices leads to an “end” which buyers and sellers are not totally pleased with, but one that is efficient.
Create mutually agreed upon prices over time if the market is subsidized.
As prices increase, demand falls, but supply rises, creating an equilibrium outcome.
Self-interested activities help eliminate shortages and surpluses if price ceilings and price floors are effectively utilized.
Which of the following is true of market social equilibrium if third parties, people outside the market for a good, bear part of the cost of the good's production?
Socially optimal quantity will be greater than the private quantity, and the socially optimal price will be greater than the private price.
Socially optimal quantity will be less than the private quantity, and the socially optimal price will be greater than the private price.
Socially optimal quantity will equal the private quantity, and the socially optimal price will equal the private price.
Socially optimal quantity will be less than the private quantity, and the socially optimal price will be less than the private price.
Socially optimal quantity will be greater than the private quantity, and the socially optimal price will be less than the private price.
Suppose that you run a tutoring service for economics students. The table below reports the demand for your services by 8 students per week. In the table are reported each student’s reservation price of a tutoring session per week. Note that each student demands at most one tutorial session per week.
In addition, the opportunity cost of your time is $24 per session. There are no competitors for your service.
A)How many tutor session is socially optimal? Explain.
B)Assume that you can only charge a single price for your services. What price are you going to charge the students to maximize your profit? How many sessions will you sell?
C)Now, suppose that you are able to practice perfect price discrimination. How many sessions will you sell to maximise profits? Compute consumer surplus and the Deadweight loss.
Chapter 11 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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