Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971509
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 6, Problem 10PA
Subpart (a):
To determine
Subpart (b):
To determine
Equilibrium price and equilibrium quantity with
Subpart (c):
To determine
Equilibrium price and equilibrium quantity with
Subpart (d):
To determine
Equilibrium price and equilibrium quantity with tax.
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Consider a market that is initially in equilibrium and the equilibrium price and quantity are P and Q respectively. Then, the government decides to impose a price ceiling at a price of Pc that is less than P. Which of the following statements is correct?
1. After the price ceiling is imposed, the quantity demanded is less than the quantity supplied on the market.
2. After the price ceiling is imposed, the quantity actually sold in the market is lower than it was before the price ceiling was imposed.
3. Producer surplus in the market increased after the price ceiling was imposed.
4. Since Pc is less than P, the price ceiling is effective and therefore, there is no deadweight loss in the market.
The next 3 questions involve the following supply and demand equations.
Supply: q = 15 + (1/4)p Demand: q = 90 − (1/2)p
6. What is the market equilibrium?1
(A) p∗ =140,q∗ =50
(B) p∗ = 56.25, q∗ = 29.07 (C) p∗ = 29.07, q∗ = 160 (D) p∗ =100,q∗ =40
7. The government enacts a price ceiling of $80. What is the surplus (quantity supplied minus quantity demanded)?
(A) 15.
(B) 10.
(C) 25.
(D) None of the above
8. What is the Deadweight Loss under a price ceiling of $80?
(A) $875.
(B) $350.
(C) $525.
(D) None of the above.
suppose that demand in the market for good x is given by the equation Q^d=30 minus P and that supply in the market for good X is given by the equation Q^s=2P.
If the government set a price ceiling at $12, would there be a shortage or surplus, and how large would be the shortage/surplus?
Chapter 6 Solutions
Principles of Macroeconomics (MindTap Course List)
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Similar questions
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