EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9781305465626
Author: Blinder
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 15, Problem 2TY
To determine
The effect of a new disease that attacks coffee plants and the efficient allocation of resources.
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Chapter 15 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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- 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 in consumption. Discuss the impact of the good harvest on each of the three markets.arrow_forwardwhich statement is true and why are the others false.justify Moving production from a high-cost producer to a low-cost producer will decrease total surplus;TRUE Suppose the United States changed its laws to allow for the legal sale of a kidney and the government allowed a free market in organs for transplant then there would be a decrease in the price of a kidney and an increase in the shortage of kidneys for transplant;TRUE If a good is not being produced by sellers with the lowest cost, then the market reflects inefficiency in the allocation of resources:FALSE Assume there are only three sellers in a particular market. The cost of production for Annie is $50, for Beth it is $40 and for Cathy it is $35. If the price in the market is $45 then Annie will sell the product but Beth and Cathy will not sell. :FALSE Suppose favorable weather provides increases apple production. As a result, consumer surplus in the market for orange juice decreases because the supply curve of apple juice…arrow_forwardAssume 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 in consumption. Discuss the impact of the good harvest on each of the three markets. 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?arrow_forward
- Assume that we are looking at the market for California wine. Assume that the initial equilibrium price is $20 and quantities are 1,000. What would be the impact on this market of a severe drought that destroys 50% of the grapes that are used to make this wine? Supply would shift to the left, a shortage would develope, prices would decrease resulting in higher prices and lower quantity of wine. Supply would shift to the left, a surplus would develope, prices would increase resulting in higher prices and lower quantity of wine. Supply would shift to the left, a shortage would develope, prices would increase resulting in higher prices and higher quantity of wine. Supply would shift to the left, a shortage would develope, prices would increase resulting in higher prices and lower quantity of wine.arrow_forwardThe table shows the hypothetical demand and supply for coffee beans in two countries: Mexico and Armenia. Price ($) per pound of coffee beans Price ($/lb) Mexico quantity demanded (lb) Mexico quantity supplied (lb) Armenia quantity demanded (lb) Armenia quantity supplied (lb) 8 180 500 155 210 7 200 460 180 180 6 250 410 200 160 5 280 360 220 140 4 320 320 240 125 3 350 280 260 115 In autarky, what would the equilibrium price and quantity be in Mexico and Armenia? equilibrium price in Mexico: $ equilibrium quantity in Mexico: lb equilibrium price in Armenia: $ equilibrium quantity in Armenia: lbarrow_forwardExplain why price moves towards equilibrium in a free market and why the equilibrium price may change over time.arrow_forward
- This is a picture of a farmer's market. A farmer's market is a place where farmers bring their fresh produce to sell to consumers at low prices. Based on the information provided to you, name at least two scarce resources that were probably used to produce the fruits and vegetables shown in the picture. What would happen if one of those resources were no longer available? Choose which resource you want to pretend is no longer available, then provide an example as to how the business would be affected.arrow_forward(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…arrow_forwardConsider the market for gasoline that is initially in equilibrium. Suppose that the Middle East, a major supplier of petroleum used to produce gasoline, erupts into war. At the same time suppose that the price of electric vehicles falls. Given these changes and holding everything else constant, what happens to the equilibrium price and quantity in the market for gasoline relative to the initial equilibrium price and quantity in the market a. The equilibrium price may increase, decrease or remain the same while the equilibrium quantity will decrease b. The equilibrium price may increase, decrease or remain the same while the equilibrium quantity willincrease c. The equilibrium price will increase while the equilibrium quantity may increase, decrease or remain the same d. The equilibrium price will decrease while the equilibrium quantity may increase, decrease or remain the samarrow_forward
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