EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Chapter 7, Problem 2IAPA
To determine
To explain:
The reaction of the gasoline market to the
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The government in your country is considering three programs that affect the market for cigarettes.
Program 1: Media campaigns and labelling requirements aimed at making the public aware of the dangers of cigarette smoking
Program 2: A price-support program for tobacco farmers
Program 3: A cap on the number of cases of cigarettes sold per quarter at 20,000 cases.
The aim of the government is to support farmers while reducing the consumption of cigarettes. What program of combination of programs should be implemented?
Why?
Current Stats for Gasoline:
Government Enforced Price Ceiling - $4.50/gallon
Current Market Equilibrium - $3.00/gallon
OPEC, the largest global supplier of oil used to make gasoline, has decided to reduce output by 50%. This policy change is expected to drive up the cost of gasoline to $5.00/gallon. How does that price change interact with the price ceiling?
A. Changes the Price Ceiling from Binding to Non-Binding
B. Disrupts Oil Supply
C. Changes the Price Ceiling from Non-Binding to Binding
D. No Change
The government in your country is considering three programs that affect the market for cigarettes.
Program 1: Media campaigns and labeling requirements aimed at making the public aware of the danger of cigarette smoking.
Program 2: A price support program for tobacco farmers.
Program 3: A cap on the number of cases of cigarettes sold per quarter at 20,000 cases.
The aim of the government is to support farmers while reducing the consumption of cigarettes.
What program or combination of programs should be implemented and why?
Chapter 7 Solutions
EBK FOUNDATIONS OF ECONOMICS
Ch. 7 - Prob. 1SPPACh. 7 - Prob. 2SPPACh. 7 - Prob. 3SPPACh. 7 - Prob. 4SPPACh. 7 - Prob. 5SPPACh. 7 - Prob. 6SPPACh. 7 - Prob. 7SPPACh. 7 - Prob. 8SPPACh. 7 - Prob. 9SPPACh. 7 - Prob. 10SPPA
Ch. 7 - Prob. 11SPPACh. 7 - Prob. 1IAPACh. 7 - Prob. 2IAPACh. 7 - Prob. 3IAPACh. 7 - Prob. 4IAPACh. 7 - Prob. 5IAPACh. 7 - Prob. 6IAPACh. 7 - Prob. 7IAPACh. 7 - Prob. 8IAPACh. 7 - Prob. 9IAPACh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - Prob. 5MCQCh. 7 - Prob. 6MCQCh. 7 - Prob. 7MCQCh. 7 - Prob. 8MCQ
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- You will analyze the Market for Gasoline Step 1: Draw a supply-and-demand diagram. Price is on the vertical axis, quantity is on the horizontal axis, demand is downward-sloping, supply is upward- sloping, and be sure to label equilibrium price and equilibrium quantity. Step 2. Change colors! If you have a highlighter or colored pencil (crayon, sharpie, whatever). Step 3. Show the change in demand or supply (only one curve will shift in each scenario). State if the curve decreases or increases. Step 4: Show the new equilibrium price and equilibrium quantity. Step 5: Repeat Steps 1-4 for each scenario. You will have a total of 4 graphs. Scenario A: A hurricane destroys refineries that produce gasoline. Scenario B: Consumers purchase electric vehicles that do not need gasoline. • Scenario C: Technological innovation occurs that reduces the cost of producing gasoline. Scenario D: Road trips become the one and only vacation option and many families opt for long-distance road trips. ● .arrow_forwardThe table below shows the demand and supply schedule for gasoline in a hypothetical country called Microland Price per litre ($) Quantity Demanded in 000 Quantity Supplied in 000 litres (per Month) litres (per month) 11 0 27 10 2 25 9 4 23 8 6 20 7 8 17 6 10 15 5 12 12 4 14 10 3 16 7 2 18 5 1 3 3 Describe THREE (3) other changes that could have the same effect on market supply of gasoline as the imposition of the subsidyarrow_forwardQd Qs 4.75 Price of Coffee ($ per 4.5 cup) 4.25 4 3.75 3.5 3.25 2.75 2.5 2.25 2 1.75 1.5 1.25 1 0.75 0.5 0.25 2. 25 1. 3. 4. 6. 00 Quantity of coffee, thousands of cups 1.5 4.5 6.5 9.5arrow_forward
- Price Per Unit $30 $25 $20 $15 $10 $5 5 Answer: 15 Supply Supply with subsidy Demand 10 15 20 25 30 X 35 40 The graph above shows the demand and supply of a good. It also shows a per unit subsidy paid to suppliers. Determine price that suppliers get to keep (Ps) with this subsidy. (Do not include a "$" sign in your response.) Quantityarrow_forwardThe government in your country is considering three programs that affect the market for cigarettes. Program : A price-support program for tobacco farmers. Determine the impact on the market if this program is implemented (i) Impact on Demand? (ii) Impact on Supply? (iii) Impact on Price? (iv) Impact on Quantity?arrow_forward. Which statement best explains how a price ceiling affects the market for gasoline? It can cause more gasoline producers to enter the market. It can lead to producers increasing their production costs for gasoline. It can cause shortages in the supply of gasoline. It can lead to a decrease in the demand from consumers for gasoline.arrow_forward
- Consider the market for bus travel, where equilibrium price and quantity is determined by demand and supply. If bus travel is an inferior good and there is an increase in income and at the same time, the government subsidises bus travel, which of the following will occur? (a) The equilibrium price and quantity will be lower. (b) The equilibrium quantity will be higher, but the impact on price will be unknown. (c) The equilibrium price will be lower, but the equilibrium quantity will be higher. (d) The equilibrium price will be lower, but the impact on quantity will be unknown.arrow_forwardConcerned about the political fallout from rising gas prices, suppose that the U.S. government imposes a price ceiling of $3.00 a gallon on gasoline. Explain how the market for gasoline would react to this price ceiling if a global shortage of oil sent the equilibrium price of gasoline to $3.50 a gallon. Would the U.S. gasoline market be efficient?arrow_forwardCreate at least one graph that shows the demand curve, the supply curve, shifts in demand and/or supply curve, changes in equilibrium quantity and equilibrium price, price ceilings and/or price floors. You don’t need to look for any statistical data regarding quantities or prices for the product.arrow_forward
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