Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971509
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 7, Problem 6CQQ
To determine
The impact of producing higher than the equilibrium.
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Students have asked these similar questions
Price(per bottle)
Quantity supplied
Normal timesquantity demanded
Hurricanequantity demanded
$6
100
25
75
$5
85
35
85
$4
70
45
95
$3
55
55
105
$2
40
65
115
$1
25
75
125
Concerned with citizen complaints of price gouging during past hurricanes, Florida's state government passes a law setting a price ceiling for a bottle of water equal to the market equilibrium price during normal times. After all, it seems unfair that sellers of water gain because of a hurricane.
During a hurricane, there would be a shortage of bottles of water.
Without the antiprice gouging law, consumers would have to pay $ more than the ceiling price, but they would be able to buy more bottles of water.
Critically evaluate and explain each statement: An excess of price over marginal cost is the market’s way of signaling the need for more production of a good.
Producing a quantity larger than the equilibriumof supply and demand is inefficient because themarginal buyer’s willingness to pay isa. negative.b. zero.c. positive but less than the marginal seller’s cost.d. positive and greater than the marginal seller’scost.
Chapter 7 Solutions
Principles of Macroeconomics (MindTap Course List)
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- a) The portion A is market surplus while the portion B is market shortage b) The portion B is market surplus while the portion A is market shortage c) Only A is the market surplus d) All the options are FALSEarrow_forward3.Producer Surplus is which of the following (check all that apply) a. Profit plus fixed costs b. total revenue minus total cost c. total revenue minus total cost d. Total revenue minus variable costarrow_forward(1) Explain the Determinants of Demand and Supply integrating outside source examples.arrow_forward
- The value of a price-distorting subsidy for a three-bedroom apartment is $100 per month. This means that the person choosing to live in an apartment of that size would have to pay an extra $100 per month at the market rent. Then it follows that: A.that person would be just as well off if she received a cash subsidy of less than $100 per month. B.that person would be better off if she received a cash subsidy of $100 per month. C.that person would be better off if she received a cash subsidy of $100 per month, or that person would be just as well off if she received a cash subsidy of less than $100 per month D.that person would be worse off if she received a cash subsidy of $100 per month.arrow_forwardAssume all benefits (and costs) accrue to the buyers (and sellers) and the buyers and sellers interact in a market. Currently we have three buyers who value a good at $40. There are three possible sellers A, B, C whose marginal costs of production are $20, $30 and $50. Another seller, D, enters the market. D's marginal costs of production is $40. What is the change in surplus caused by D's entry?Do not include the $ sign and remember to include a negative sign if you want to say that surplus has decreasedarrow_forwardA county in U.S. has a market for jewelry which buyers and sellers decide the price of jewelry. The reginal price for it is above the county price and jewelry are a tradable. Using simple diagrams and proper labels show this situation, and the resulting consumer and producer surplusarrow_forward
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