Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 22, Problem 6DQ
To determine
The tax and the subsidies in the agricultural sector.
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Assume the following values for attached figures: Q1 = 20 bags. Q2 = 15 bags. Q3 = 27 bags. The market equilibrium price is $45 per bag. The price at a is $85 per bag. The price at c is $5 per bag. The price at f is $59 per bag. The price at g is $31 per bag. Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions. LO4.2 a. What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output level is being produced? How large is the dollar value of the consumer surplus at that output level? b. What is the dollar value of the deadweight loss when output level Q2 is being produced? What is the total surplus when output level Q2 is being produced? c. What is the dollar value of the deadweight loss when output level Q3 is produced? What is the dollar value of the total surplus when output level Q3 is produced?
Suppose demand and supply are given by: (LO3, LO4)Qx d = 14 − 1/2Px and Qx s = 1/4Px − 1c. How much tax revenue does the government earn with the $12 tax when the new equilibrium quantity is 2 units after tax .
Consider the market for product ABC, when the price is at Php 12, quantity demanded is 6 units and quantity supplied is 3 units. An eight pesos increase in the price would change quantity demanded by 2 units and quantity supplied by 4 units.
1. If the government imposed Php 0.75 tax, how much would be the tax burden of the seller?2. At equilibrium point, how much is the consumers surplus? how much is the total surplus
3. What is the elasticity of supply for the product at equilibrium point? how about the elasticity of demand at equilibrium point?
Chapter 22 Solutions
Microeconomics
Ch. 22 - Prob. 1DQCh. 22 - Prob. 2DQCh. 22 - Prob. 3DQCh. 22 - Prob. 4DQCh. 22 - Prob. 5DQCh. 22 - Prob. 6DQCh. 22 - Prob. 7DQCh. 22 - Prob. 8DQCh. 22 - Prob. 9DQCh. 22 - Prob. 10DQ
Ch. 22 - Prob. 11DQCh. 22 - Prob. 12DQCh. 22 - Prob. 13DQCh. 22 - Prob. 14DQCh. 22 - Prob. 1RQCh. 22 - Prob. 2RQCh. 22 - Prob. 3RQCh. 22 - Prob. 4RQCh. 22 - Prob. 5RQCh. 22 - Suppose that corn currently costs 4 per bushel and...Ch. 22 - Suppose chat both wheat and corn have an income...Ch. 22 - Prob. 3PCh. 22 - Prob. 4P
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- Suppose demand and supply are given by: Q^d=14-0.5P and Q^s=0.25P-1. Determine the equilibrium quantity and price in this market. Show the equilibrium graphically. Suppose a $12 excise tax is imposed on the good.Determine new supply and the new equilibrium quantity and price. How much does producers' revenue change? How much tax revenue does the government earn?arrow_forwardIf the tax code exempts the first $20,000 of income from taxation and then taxes 25 percent of all income above that level, then a person who earns percent and a marginal tax rate of $50,000 has an average tax rate of percent. O 15, 25 O 25, 15 O 25, 30 O 30, 25arrow_forwardConsider the market for product ABC, when the price is at Php 12, quantity demanded is 6 units and quantity supplied is 3 units. An eight pesos increase in the price would change quantity demanded by 2 units and quantity supplied by 4 units. How many units is the quantity demanded when product ABC is for free? A one peso increase in the price of the product would _ quantity supplied by _ units.How many units is the equilibrium quantity? shortage ; 3.75 6decrease ; 0.25shortage ; 1.536increase ; 0.5-39 increase ; 0.25 5decrease ; 0.5 surplus ; 1.5 16surplus ; 3.75arrow_forward
- (Last Word) The combined cost of Social Security and Medicare programs was what percent of U.S. GDP in 2008 (A) 7.6 (B) 12.4 (C) 17.2 (D) 2.9arrow_forward1. Under what conditions and assumptions do markets maximize social welfare? 2. The maximization of social welfare in this model is defined as the maximization of consumer and producer surplus. Whose welfare is included in this interpretation of social welfare, and whose is excluded? 3. Do you think that social efficiency (defined as the maximization of consumer and producer surplus) is always an appropriate tool for analyzing the net impact of different policies? - Can you think of some policy situations in which social efficiency is a sufficient measure for determining which policies should be enacted? Explain. - Can you think of some policy situations in which social efficiency would be an inappropriate goal of policy discussions? Explain.arrow_forward09. Given a price ceiling set at $8, what would be the quantity traded in this market? a) 4 b) 5 c) 7 d) 8 e) 9 f) 12 g) 13 h) 16 i) 17 10. Given a price floor set at $16, what would be the quantity traded in this market? a) 4 b) 5 c) 7 d) 8 e) 9 f) 12 g) 13 h) 16 i) 17 12. Which of the following statements are true? a) Economists call the farm price support system "welfare for the rich" b) There is a fixed amount of jobs in the economy. c) Price ceilings and price floors cause economic inefficiency and corruption. d) General price controls is considered by economsts among the most stupid policies. e) Only Democrats support price control policies.arrow_forward
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