EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Chapter 8, Problem 2QCMC
To determine
The change in
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Sofia pays Sam $50 to mow her lawn every week. When the government levies a mowing tax of $10 on Sam, he raises his price to $60. Sofia continues to hire him at the higher price. What is the change in producer surplus, change in consumer surplus, and deadweight loss?a. $0, $0, $10b. $0, −$10, $0c. +$10, −$10, $10d. +$10, −$10, $0
Figure 7-5
Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?
a. $5,625
b. $3,125
c. $625
d. $2,500
Refer to the figure above. Total producer surplus received by the seller at equilibrium is:
A. $100
B. $125
C. $200
D. $625
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- what is the deadweight loss due to a $2 tax? a) 200 b) none 50 100 e) 150 7- Domestic supply 6- Domestic Demand 500 Quantity 5. 4- 2- 1. 100 200 300 400arrow_forwardRyan would be willing to pay $1 for a lollipop. Sarah would be willing to pay $0.50. The price of the lollipop is $0.75. What is Ryan and Sarah's combined consumer surplus? a. $0 b. $0.25 c. $0.50 d. $0.75 Can someone please explain to me why the correct answer here is $0.25? I did the calculations and i keep getting $0 the follwing is my calculationsarrow_forwardFigure 7-6 PRICE 0" A с D B (5) G QUANTITY Refer to Figure 7-6. Area A represents Supply producer surplus to new producers entering the market as the result of an increase in price from P₁ to P₂. the increase in consumer surplus that results from an upward-sloping supply curve. the increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂- the increase in producer surplus to those producers already in the market when the price increases from P₁ to P₂.arrow_forward
- Price per pound Price per pound $9 8965 7 32 1 0 $9 8 7 6 5 4 3 2 -N Panel (a) An increase in demand LO Panel (c) An increase in supply S₁ 5 10 15 20 25 30 35 40 45 Quantity (millions of pounds per month) D₁ D₂ S₁ S₂ 0 5 10 15 20 25 30 35 40 45 Quantity (millions of pounds per month) Price per pound Price per pound $9 8 7 6 2 1 $9 8 7 65 Panel (b) A decrease in demand 4 3 2 1 D₂ 0 5 10 15 20 25 30 35 40 45 Quantity (millions of pounds per month) D₁ Panel (d) A decrease in supply $₂ S₁ D₁ 0 5 10 15 20 25 30 35 40 45 Quantity (millions of pounds per month)arrow_forwardProducer surplus from a unit of output is the difference between the market price and the seller's cost of producing that unit. a. True b. Falsearrow_forward1. The demand curve for cab rides is p = 5 · y where y represents passenger miles. %3D 1,000' The supply curve is p = 2 for y< 2,500 and it becomes perfectly inelastic at y = 2,500. (i) Find the equilibrium price and quantity. (ii) Find the consumers' surplus and producers' surplus. (iii) Suppose that an excise tax of e = 0.50 per passenger mile is imposed on suppliers. Find the new equilibrium price and quantity. (iv) Finally, suppose that a sales tax of t= 0.50 is imposed on consumers. (The excise tax is still in place.) Find the new equilibrium price and quantity. (v) Explain briefly why the economic burden of the tax and the deadweight loss from imposing the tax are different for the excise tax and the sales tax.arrow_forward
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