Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 5, Problem 6WNG
To determine
The impact of subsidy on the demand curve.
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Students have asked these similar questions
why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of supply?
In 2022, pet food prices have risen sharply but quantity demanded has not fallen much. It makes sense that the demand for pet food would be ___________ since __________. Thus, higher prices would lead to ______ revenue for pet food producers.
Inelastic; pet food is more of a luxury good; more
Inelastic; people consider their pets to be necessities; more
Elastic; pet food takes a small percentage of most consumer’s income; less
Unit elastic; pet food is more of a luxury item; less
Epi-pens are a name-brand medicine. Epi-pens are used to quickly inject epinephrine into the body in the event of a severe allergic reaction. Many Americans require Epi-pens due to potentially life-threatening allergies.
Using the concept of elasticity, explain why the government would likely not impose a tax on the market for Epi-pens.
Suppose the government believes the price of Epi-pens is too high, so they impose a price control on the market.
Would the government use a price floor or a price ceiling in this situation?
What effect would the chosen price control have on the market.
Suppose that the number of adults developing severe allergies increases. At the same time the patent for Epi-pens expires, allowing new producers of Epi-pens to enter the market. Explain what will happen to the equilibrium price and quantity of Epi-pens.
Chapter 5 Solutions
Macroeconomics
Ch. 5.1 - Prob. 1STCh. 5.1 - Prob. 2STCh. 5.2 - Prob. 1STCh. 5.2 - Prob. 2STCh. 5.3 - Prob. 1STCh. 5.3 - Prob. 2STCh. 5.4 - Prob. 1STCh. 5.4 - Prob. 2STCh. 5.5 - Prob. 1STCh. 5.5 - Prob. 2ST
Ch. 5.6 - Prob. 1STCh. 5.6 - Prob. 2STCh. 5.7 - Prob. 1STCh. 5.7 - Prob. 2STCh. 5.8 - Prob. 1STCh. 5.8 - Prob. 2STCh. 5.9 - Prob. 1STCh. 5.9 - Prob. 2STCh. 5.10 - Prob. 1STCh. 5.10 - Prob. 2STCh. 5.11 - Prob. 1STCh. 5.11 - Prob. 2STCh. 5.12 - Prob. 1STCh. 5.12 - Prob. 2STCh. 5 - Prob. 1QPCh. 5 - Prob. 2QPCh. 5 - Prob. 3QPCh. 5 - Prob. 4QPCh. 5 - Prob. 5QPCh. 5 - Prob. 6QPCh. 5 - Prob. 7QPCh. 5 - Prob. 8QPCh. 5 - Prob. 9QPCh. 5 - Prob. 10QPCh. 5 - Prob. 11QPCh. 5 - Prob. 12QPCh. 5 - Prob. 13QPCh. 5 - Samantha is flying from San Diego, California to...Ch. 5 - Prob. 15QPCh. 5 - Prob. 16QPCh. 5 - Prob. 1WNGCh. 5 - Prob. 2WNGCh. 5 - Prob. 3WNGCh. 5 - Prob. 4WNGCh. 5 - Prob. 5WNGCh. 5 - Prob. 6WNG
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Similar questions
- Who would pay a tax imposed on the supplier when the price elasticity of supply is inelastic and the price elasticity of demand is elastic?arrow_forwardBriefly explain how subsidizing the purchase of good "X" could end raising the price of good "X"arrow_forwardIf you had been hired to advise your local public transit authority on how they could raise transit revenues and you knew the elasticity of demand for transit rides, you would be able to give a good answer. Explain why each of the following statements is True, False, or Uncertain according to economicprinciples. Use diagrams where appropriate. Unsupported answers will receive no marks. It is theexplanation that is important.arrow_forward
- (1)Find q, ∂q/∂Y and ∂q/∂p, when the price that the firm sets is $30.00, and the average disposable income in the market is $3,000.00. (2)Find the price-elasticity of demand for the firm's good at the point in part (1).Use your answer to (2) to estimate the percentage change in demand if the firm raises the price for their good to $31.00 (and average income in the market stays fixed).arrow_forwardEnergy markets, such as the market for natural gas and electricity, have been known to be characterized by inelastic demand. However, recent research discussed in the August 25, 2022 issue of The Economist, indicates that while the responsiveness of quantity demanded in response to price changes indeed is “inelastic” (i.e., the absolute value of price elasticity of demand is still less than 1), the percentage change in quantity demanded in response to a change in price is much larger than earlier research indicated. Answer these narrative questions. No graphs are needed. What does “inelastic demand” formally mean? In addressing this part of the question, please make sure to explain the concept of the price elasticity of demand using a simple formula and by providing a short narrative. Policymakers are encouraging people to conserve energy in response to the growing energy crisis. Discuss the positives (pros) and negatives (cons) of providing subsidies to consumers in this situation…arrow_forwardA city has built a bridge over a river and it decides to charge a toll to everyone who crosses. For one year, the city charges a variety of different tolls and records information on how many drivers cross the bridge. The city thus gathers information about elasticity of demand. If the city wishes to raise as much revenue as possible from the tolls, where will the city decide to charge a toll: in the inelastic portion of the demand curve, the elastic portion of the demand curve, or the unit elastic portion? Explain.arrow_forward
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