Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (2nd Edition)
2nd Edition
ISBN: 9780134641904
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 7, Problem 12P
(a)
To determine
The
(b)
To determine
The solution to the problem in Beijing.
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In Winnipeg the vacancy rate (the percent of apartments that are available to rent) is very low, especially for apartments with lower rents. In fact, there are far more people looking for apartments than there are apartments to rent. This shortage of apartments means that people are having a very difficult time finding apartments to rent, especially those with low incomes. Some groups in Winnipeg are calling for the provincial government to start building apartment buildings. Use supply and demand curves to explain why a free market economist might argue that government intervention in the market for apartment rentals is unnecessary. What market failure might they be overlooking with that claim?
Suppose you are asked to do a market analysis in an area in which a natural disaster has recently occurred. (An example might be Nashville after the spring floods or New Orleans after Hurricane Katrina.)
Other than building supplies (which is too easy :), choose a market for a good or service that will be affected.
Will demand or supply be affected? (Even if it might be both, just choose one or the other to keep it simpler).
What happens to equilibrium prices and output in this market? Draw a supply and demand graph for your own use, and then explain the process in detail.
Choose a market that has not already been chosen by a classmate. Be creative and thoughtful!
Chapter 7 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (2nd Edition)
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- How does a market reach equilibrium without any outside intervention? Explain using the supply and demand concept.arrow_forwardThe table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $2.20, then A. there is a surplus of gasoline in Tulsa. B. there is a shortage of gasoline in Tulsa. C. the gasoline market in Tulsa is in equilibrium. D. Without more information we cannot determine if there is a surplus, a shortage, or an equilibrium in the gasoline market in Tulsa. E. There is neither a surplus nor a shortage, but the market is NOT in equilibrium.arrow_forwardGenerally speaking, what must occur in order for demand to shift? Supply to shift? How does the concept of the invisible hand help explain how markets reach equilibrium?arrow_forward
- Which of the following is NOT a way that the government can intervene in markets? a)The government can set minimum wages. b)The government can raise taxes on a particular item. c)The government can pass laws on sales taxes. d)The government can stop the forces of demand and supply from working in markets.arrow_forwardCongress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on each gallon of gasoline sold. Suppose they decided to impose the tax on consumers. In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on consumers by shifting the demand or supply curve. DemandSupply01234563.02.52.01.51.00.50Price of Gasoline (Dollars per gallon)Quantity of Gasoline (Thousands of gallons)Demand Supply True or False: The effect of the tax will be the same regardless of whom the tax is imposed on. True False This tax would be more effective in reducing the quantity of gasoline consumed if the demand for gasoline were elastic. True or False: Consumers of gasoline are helped by this tax. True False Workers in the oil industry are by this tax.arrow_forwardCongress and the president decide that the UnitedStates should reduce air pollution by reducing its useof gasoline. They impose a $0.50 tax on each gallon ofgasoline sold.a. Should they impose this tax on producers orconsumers? Explain carefully using a supply-anddemand diagram.arrow_forward
- The following graph shows the market for milk. The market price of milk without government intervention is____________per gallon. Consider the legislation that doesn't allow the price of milk to be below $8 per gallon and stimulates that the government by any surplus milk produced at that price. In order to raise the price of $8 per gallon, the government would need to buy______million gallons of milk, which would cost the government__________million. Suppose there are only a few dairy Farmers who would benefit from this legislation and millions of consumers who would suffer through higher prices. In this case, legislation imposing price supports at $8 per gallon would mean which of the following? The legislation will probably pass because it's benefits are concentrated while it's cost or widespread. The legislation should pass because it's economical efficient, but it probably won't because consumers don't understand enough about economics. The legislation may or may not pass since…arrow_forwardAnswer the following questions based on the graph that represents Kyle's demand for ribs per week at Big Ed's Barbecue. f. If the price of ribs rose to $10, what would happen to Big Ed's producer surplus? g. What is the total surplus in this market at a price of $10? h. If the price of ribs fell to $5, what would be Kyle's consumer surplus? j. What is the total surplus in this market at a price of $5?arrow_forwardGraph the following a. Flood destroys the rice crops. Demand remains constant. Show effects on market price and supply b. Corn grains are imported. Demand remains the same. Show effects on market price and supply c. People of town X move to town Y. Supply in town X remains the same. Show effects on market price and demand in the former d. Market price of palay is Pl5/kilo, Government increases it to P20/kilo. Show effects e. A bountiful harvest of rice in the latest harvest season. With demand remaining the same show effects on market price and supply curve.arrow_forward
- Graph the following a. Flood destroys the rice crops. Demand remains constant. Show effects on market price and supply b. Corn grains are imported. Demand remains the same. Show effects on market price and supply c. People of town X move to town Y. Supply in town X remains the same. Show effects on market price and demand in the former d. Market price of palay is Pl5/kilo, Government increases it to P20/kilo. Show effects e. A bountiful harvest of rice in the latest harvest season. With demand remaining the same show effects on market price and supply curve. NOTE: PLEASE DON’T DO IT IN HAND-WRITTEN.arrow_forwardWhat are some markets (goods or services) where an equilibrium might not be the most desirable point? Meaning, if left alone, the market produces too much or too little compared to societal needs. Example: In a purely free market, we might get a housing equilibrium where many people are still without housing, meaning we have homeless people in the streets.arrow_forward
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