8. Consider a competitive market where the market demand and the market sup- ply are given, respectively, by Q" = 500 - 2P and Q* = 2P (a) Find the competitive equilibrium price and quantity. (b) Suppose the government wants to help the producers by imposing a price floor of p, = 150. Assuming that the producers correctly anticipate the demand at price pr, find the consumer surplus, producer surplus, and the deadweight loss.
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- 3. Consider a market where the supply and the demand are given by Q (P) = 100P and QP (P)=2000-100P. (a) Find the equilibrium price, quantity, consumer surplus, producer surplus, and the aggregate surplus. (b) Suppose the government wants to raise revenue by imposing tax of Y4 per unit. What is the price producers get, the price consumers pay, the equilibrium quantity, the tax revenue, and the dead weight loss? (c) Suppose the government is thinking about imposing an ad valorem tax instead of per unit tax. What does the tax rate has to be to keep the price consumers pay the same as in the per unit tax case? (d) Which tax scheme is better for the economy? Why?The Chief Medical Officer has advised the government that consumption of widget-corn improves the survival rate of COVID-19 by 20%. Supposethe supply and demand functions for widget-corn are:QD = 100 – 5P (1)QS = 5P. (2) P is the price in dollar and Q is the quantity in kilograms.a. Determine the market equilibrium price and quantity of widget-corn? b. Calculate the consumer surplus, producer surplus, and total economic surplus at the market equilibrium. c. Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered widget-cornsellers to charge $5 per kilogram.(i) What type of price regulation policy is this? Briefly explain. (ii) Calculate the impact of the policy on the quantity of widget-corn supplied and demanded. (iii) Explain the impact of the policy consumer surplus, producer surplus, and total economic surplus. (iv) Is the outcome of the government’s policy efficient and, therefore, maintained or abandoned? Explain in detail.…Suppose demand and supply are given by? = 500-2P and ? =-100+3Pa) Which function is the demand function and why?b) Compute the equilibrium price and quantity in this market?c) Compute the consumer surplus and producer surplus.d) Suppose a GHC 1 exercise tax is imposed on the good. Determine the new equilibrium price and quantity.e) Compute the tax revenue to the government. f) Compute the deadweight loss resulting from the tax.
- Q1. A market is characterized by the demand function is given by Qa= 1,080 – 3P and the supply function Qs= 6P – 360 respectively. (c) The government now establishes a $60 subsidy for buyers every time they purchase a unit of the good. How much tax-payer money will the government spend to support this policy? What is the size of the deadweight loss generated by the subsidy? (d) Firms can now export at an international price of $240 per unit. How many units are exported? How much are the gains from trade?4. Suppose that the demand curve and supply functions are qp = 300–5p and qs = 100+20p, respectively. (a) On the same graph, draw the demand and supply curves with price on the vertical axis. (b) What is the quantity and price in the equilibrium? (c) Calculate consumer surplus and producer surplus. (d) Suppose the government implements a $5 dollar per unit sales tax. i. Calculate the new quantity and the price paid by the consumer. ii. Calculate the consumer surplus, producer surplus, tax revenue, and deadweight loss. iii. What share of the tax is passed on to the consumer and what share of the tax is passed on to the producer? iv. Graph the taxed equilibrium on a new graph. (e) Recalculate parts a through d but now suppose that quantity supplied is perfectly inelastic. Specifically, suppose that qs = 100. (f) Recalculate parts a through d but now suppose that quantity demanded is perfectly inelastic. Specifically, suppose that qp = 4001. Consider a market where the demand is given by Q = 120 –P and supply is %3D given by QS = P. What are the consumer and producer surplus? Р. %3D a) Consumer surplus is 120 arnd producer surplus is 600. b) Consumer surplus is 600 and producer surplus is 1200. c) Consumer surplus is 240 and producer surplus is 300. d) Consumer surplus is 1200 and producer surplus is 240.
- 1. Define "consumer surplus" and "producer surplus." Consumer surplus (CS) is the benefit surplus received by a consumer or consumers through market transactions. A CS arises because all consumers pay the equilibrium price even though some consumers would be willing to pay more. CS is measured as the difference between the (maximum. minimum ) price a consumer is (or consumers are) willing to pay (WTP) ( plus, minus , the same as ) the actual price. Consumer surplus is (directly, inversely) related to price. Producer surplus (PS) is the benefit surplus received by a producer or producers through market transactions. A PS arises because some producers are willing to sell a product at a lower price than the equilibrium price. PS is measured as the difference between the actual price the producer receives (or producers receive) and the (maximum, minimum ) price a producer is (or producers are) willing to accept (WTA) as a selling price. Producer surplus is directly, inversely) related to…Please written by computer source Suppose that the demand curve for a product is given by Q = 100 −10p and the supply curve is Q = 10p. Assume that income effects (elasticities) are small so consumer surplus is a good measure of consumer welfare. (a) What is the equilibrium price and quantity with no distortions? (b) The government imposes a tax of $2.00 per unit sold. What is the new equilibrium quantity? Sketch the market equilibrium in a graph. (c) Given the tax what is the change in consumer surplus? What is the change in producer surplus? What is the change in government revenue? What is the net Dead Weight Loss from the tax? (d) Say the government proposes to use the revenue from the tax to pay for snacks in our last ECON 312A lecture. The total social benefits from the snacks would be $82.00. Will the tax increase overall welfare if the revenue is used to buy the snacks? What is the dollar value of the net gain or loss to society?QUESTION 1: The Chief Medical Officer has advised the government that consumption of widget-corn improves the survival rate of COVID-19 by 20%. Suppose the supply and demand functions for widget-corn are:QD = 100 – 5P (1) QS = 5P. (2) P is the price in dollar and Q is the quantity in kilograms. a. Determine the market equilibrium price and quantity of widget-corn? b. Calculate the consumer surplus, producer surplus, and total economic surplus at the market equilibrium. c. Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered widget-corn sellers to charge $5 per kilogram. (i). What type of price regulation policy? Briefly explain. (ii). Calculate the impact of the policy on the quantity of widget-corn supplied and demanded. (iii) Explain the impact of the policy consumer surplus, producer surplus, and total economic surplus. (iv) Is the outcome of the government’s policy efficient and, therefore, maintained or abandoned?…
- Figure 8-10 PO Pl P2 P3 P4 PS P6 D7 PO Price P9 0 Q1 Q2 Q3 Q4Q5 a) 1/2 x (P2-P8) x (05-02) Supply D Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2 Without the tax, the total surplus is c) (P2-P8) x Q2 Quantity b) [1/2x (PO-P2) x Q2]+[(P2 PS) x Q2] + [1/2 x (P8-0) x Q2] d) [1/2 x (PO-PS) x Q5] + [1/2 x (P5-0) * Q5].23. Consider a competitive market for 'new build' homes. The demand and supply functions for this market are given by = 900 - 2p QD= 1 + zp (a) Find the equilibrium Q and p in this market. Suppose that the government want to increase the number of individuals who own a house. They are planning to subsidise transactions in this market to increase Q by 20%. (b) What is the level of subsidy (x) which is required? (c) What would be the change in producer surplus from the subsidy? Is this larger than the change in consumer surplus? (d) Calculate the deadweight loss from this subsidy. (e) Will the government's subsidy meet its objective? Qs = -100 +2. Consider a competitive market for 'new build' homes. The demand and supply functions for this market are respectively given by: QD = 900 – 2p 1 Qs = -100 + P (a) Find the equilibrium Q and p in this market. Suppose the government wants to increase the number of individuals who own a house. They are planning to subsidise transactions in this market to increase Q by 50%. (b) What is the level of subsidy (x) which is required (c) What is the total cost of this subsidy? (d) What would be the change in consumer surplus from the subsidy? Is this larger than the change in producer surplus (e) Comment on whether the government's subsidy is likely to be successful.