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 4Q
To determine
The role of prices and whether the government should interfere in the market.
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Students have asked these similar questions
In a particular market, 3,000 products are sold every month. A new government policy restricts the quantity sold to 2,500. This allows sellers of the product to raise prices, increasing producer surplus in the market by $7,000, but decreasing consumer surplus by $9,000. What is the deadweight loss associated with the policy?
Subsidies lead to overproduction and overconsumption relative to the competitive equilibrium. What is the deadweight loss associated with this? Why is there a deadweight loss? Depict this in your original figure (see attached), or draw a new figure.
When will the deadweight loss be created?
When a binding price constraint is implemented
When the market is clearing
When consumer and producer surplus are maximized
When surplus is shifted from consumer to producer
Chapter 7 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (2nd Edition)
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- What will be the result of an decrease in a price ceiling for gasoline? Group of answer choices The quantity will decrease because the quantity demanded will decrease. The quantity will remain the same; only the price will change. The quantity will increase because the quantity demanded will increase. The quantity will decrease because the quantity supplied will decrease.arrow_forwardConsider a market with a demand curve given by P = 1000 - 2Q and a supply curve given by P = 3Q. Suppose the government imposes a price ceiling of 800 dollars. What is the deadweight loss? Give your answer as a whole number.arrow_forwardThe following are correct descriptions about a Price Ceiling, EXCEPT: Question 8 options: Is the regulated price imposed below the market price that would prevail in equilibrium. A price ceiling will create an excess of supply. A price ceiling will reduce producer's surplus if the regulated price prevails. A price ceiling could lead to an increase in producer's surplus, if a black market emerges.arrow_forward
- Suppose a binding price floor is in place in a particular market. If the market is deregulated and the price floor is removed what will happen?arrow_forwardWhich of the following statements are true? a. Consumer surplus can be determined as the space between market price and supply curve. b. The supply curve reflects the willingness to pay of costumers. c. Producer surplus can be determined as the space between market price and supply curve. d. The demand curve reflects the willingness to pay of costumers.arrow_forwardWhat is deadweight loss? How is it illustrated on a demand and supply diagram? GIve an example of deadweight loss.arrow_forward
- In a market with a price ceiling, the price is: Group of answer choices No answer text provided. actually the equilibrium price because the price ceiling has no effect on the market. set lower than the equilibrium price and represents the government mandated maximum price. set higher than the equilibrium price and represents the government mandated maximum price.arrow_forwardDeadweight loss and market failure are created when a market producesarrow_forwardWhich of the following explains why is there is a deadweight loss associated with market that is not at equilibrium? A. When a price ceiling is in effect, producers refuse to sell goods at the lower price B. When a price floor is in effect, consumers refuse to sell the good at the lower price. C. When a price ceiling is in effect, consumers refuse to buy the good at the higher price. D. When a price ceiling is in effect, producers refuse to sell the good at the higher price. E. When a price floor is in effect, producers refuse to sell the good at the higher price. F. When a price floor is in effect, producers refuse to sell the good at the lower price.arrow_forward
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