Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN: 9781285165912
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 6, Problem 1PA
To determine
The impact of price ceiling on music concert ticket.
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Students have asked these similar questions
Suppose the demand for live comedy performance tickets is downward sloping and the supply of live comedy performance tickets is upward sloping. Lovers of comedy persuade Congress to impose a price ceiling of $40 per ticket for live comedy performances.
True or False: If the equilibrium price of live comedy performance tickets were $40, a price ceiling of $40 will cause more people to attend comedy performances than if there is no price control.
Which policy increases the consumption of a good?
a price floor/a price ceiling / a subsidy/ a tax
Which of the following statement is true:
a. There can never be price ceiling and price floor that are simultaneously binding in the same market.
b. Since the subsidy increases both consumer surplus and producer surplus, subsidy does not create any deadweight loss.
c. None of the other answers is correct.
d. The economic incidence of the tax depends on who must legally pay the tax.
e. In general, the burden of the tax falls on the more elastic side of the market.
Chapter 6 Solutions
Principles of Macroeconomics (MindTap Course List)
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Similar questions
- A price ceiling is intended to benefit which group of people? consumers producers The Governmentarrow_forwardSuppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding? a. Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. b. The number of farmers selling soybeans decreases. c. Consumers' income increases, and soybeans are a normal good. d. The number of consumers buying soybeans increases.arrow_forwardSome consumers lobby the government to convince law makers to impose price ceilings, what are the expected results of price ceiling (choose ALL applies) - Producer Surplus increases - Consumer Surplus increases - Consumers buy at prices lower than producer costs of production. - Consumer earn more income. - Total Surplus increasesarrow_forward
- For a price ceiling to be a binding constraint on the market, the government must set it* Above the equilibrium price Below the equilibrium price Precisely at the equilibrium price At any price because all price ceilings are binding constraints1arrow_forwardThe market for piano lessons is as follows: Demand: Q = 80 – 2P Supply: Q = 3P Draw the supply curve, demand curve, and solve for equilibrium (tax-free) price and quantity. Solve the consumer surplus and producer surplus. Impose a tax of $5 per lesson. Solve the new price paid by the consumer, price received by the seller, the quantity now sold, and total tax revenue collected by the government. Impose a tax of $10 per lesson. Solve the new price paid by the consumer, price received by the seller, the quantity now sold, and total tax revenue collected by the government. Impose a tax of $20 per lesson. Solve the new price paid by the consumer, price received by the seller, the quantity now sold, and total tax revenue collected by the government. Draw Arthur Laffer’s curve for parts A, B, C and D. Use the solved numbers from parts A, B, C, and D on this diagram. ANSWER 1 TO 5 ALLarrow_forwardWhat happens to the consumer surplus that is lost upon imposition of a price ceiling?arrow_forward
- Suppose that the government has been supporting the price of corn. Its free market price is $2.50 per bushel, but the government has been setting a support price of $3.50 per bushel. Which of the following are ways that the government might try to reduce the size of the corn surplus? (Select one or more answers from the choices shown.) a. Decrease the support price. b. Institute an acreage allotment program. c. Decrease demand by taxing purchases of corn. d. Raise the support price.arrow_forwardWhich of the following is a challenge of government setting a price floor? Which of the following is a challenge of government setting a price floor? Firms choosing to leave the market A risk of excess supply of the good A risk of excess demand for the good Prices falling below marginal costarrow_forwardAfter the OPEC oil embargo in the 1970s, price controls were placed on gas markets that did not allow price to rise to the market clearing level. Gas shortages resulted as did black markets. Use the analysis of price controls to discuss whether price controls likely hurt or helped consumers and the economy. Consider the following: Who is helped and harmed by price ceilings? Had gas prices been allowed to increase sharply, would we have made changes in our economy faster? At what cost? How does the elasticity of demand and supply impact the degree to which price and quantity would change in the gasoline market?arrow_forward
- Would the deadweight loss if the price ceiling was p1 be area A? And how would I find numbers to solve question B? Just those two thanksarrow_forwardPlease answer these two questions using the information from above: The government wants to increase production of this good. Would it make more sense to offer a subsidy or a tax? Based on your previous answers, would the government plan to increase production be likely to be effective or ineffective? Explain your answer.arrow_forward
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