Explain why minimum price makes the producers worse off.

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Answer 1

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 9, Problem 4RQ

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Explain why minimum price makes the producers worse off.

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. Explain why economists usually oppose price control

Consider a market that is initially in equilibrium and the equilibrium price and quantity are P and Q respectively. Then, the government decides to impose a price ceiling at a price of Pc that is less than P. Which of the following statements is correct? 1. After the price ceiling is imposed, the quantity demanded is less than the quantity supplied on the market. 2. After the price ceiling is imposed, the quantity actually sold in the market is lower than it was before the price ceiling was imposed. 3. Producer surplus in the market increased after the price ceiling was imposed. 4. Since Pc is less than P, the price ceiling is effective and therefore, there is no deadweight loss in the market.

If people can't afford the equilibrium price for a good, would it be a good idea for the government to force the producer to produce it and give it to the poor people? Why or why not?

Answer 2

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 9, Problem 4RQ

To determine

Explain why minimum price makes the producers worse off.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 9, Problem 4RQ

To determine

Explain why minimum price makes the producers worse off.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 9, Problem 4RQ

To determine