19. Suppose market demand is P= 25 - Q and market supply is P=5+Q. In order to support consumers government imposes a price ceiling of $10. How much is the producer's surplus after this policy? a. 12.5. b. 62.5. C. 50.

19. Suppose market demand is P= 25 - Q and market supply is P=5+Q. In order to support consumers government imposes a price ceiling of $10. How much is the producer's surplus after this policy? a. 12.5. b. 62.5. C. 50.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter5: Elasticity Of Demand And Supply

Section5.A: Appendix: Price Elasticity And Tax Incidence

Problem 2AQ

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(a) Show the market for housing in equilibrium on a diagram, where demand is less elastic than supply, andlabel the respective consumer and producer surpluses. Discuss whether this market is Pareto efficient. (b) Assume that the State Government imposes a per-unit tax on the sellers of houses. A new diagram,shows the imposition of this tax on the market for housing. Does the imposition of this tax cause a Paretoimprovement to the market, explain? (c) Is the tax imposed in part (b) effective for the collection of Government revenue? Justify your answer withreference to your diagram in part (b).
The table shows the demand and supply schedules for hay before and during a major drought. During the drought, suppose the government gave all farmers an equal quantity of hay. Resale of hay is not permitted. Suppose the government buys the equilibrium quantity of hay determined by demand and supply during the drought. and the price of a bale Total surplus is pre-drought price. ... OA. maximized; rises OB. maximized; falls OC. less than the maximum possible; falls OD. less than the maximum possible; rises OE. maximized; does not change Suppose the government buys more than the equilibrium quantity of hay and pays the supply price for this quantity. Total surplus purchased, and the price of a bale compared to the compared to the total surplus when the equilibrium quantity is compared to the equilibrium price. OA. increases; falls OB. decreases: falls M OOO = Quantity demanded Price during Quantity (dollars per before drought drought supplied bale) (thousands of bales) 0 70 1.00 2.00…
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1. Assume that the demand for cigarettes is Qd=1600-30P and the supply of cigarettes is Qs=1400+70P: a. Calculate the equilibrium price and quantity and show them on a supplyand demand diagram. b. Suppose the government levies a $2 tax for each unit of cigarettes sold.Draw this on the diagram and calculate the new equilibrium price andquantity. c. Calculate the price elasticity of demand given these two price andquantity points. Is the demand for cigarettes price elastic or inelastic onthis part of the demand curve? Interpret the elasticity in words (i.e. If theprices rises by 10%, by what percentage will consumption fall?) d. On a graph, identify the tax revenue generated by this tax. e. Indicate each area on the graph with a letter and show in a table theconsumer surplus and the producer surplus before and after the tax. Also,indicate the deadweight loss associated with this tax. f. If your policy advisor boss wanted you to provide him/her witharguments in favor of this cigarette…
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In the market for Widgets, the equilibrium price is $ 20 and the equilibrium quantity is 5000 Widgets, which of the following statements is FALSE? A. None of the above B. If the government sets a price ceiling at $ 15 companies will increase the quantity supplied C. If the government sets the price floor for widgets at $ 25 there will be a surplus of widgets in the market D. If the price ceiling is set at $ 15 there will be a shortage of Widgets in the market
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AL Price $60 40 40 20 20 0 --- 50 100 150 200 Quantity Supply Demand If the government puts a price ceiling in this market at a price of $20, then there will be a A) Neither a surplus or a shortage ☐ B) A shortage of 50 units ○ C) a shortage of 100 units OD) A surplus of 100 units AR CO 6 80 F3 Q F4 $ % do 95 F5 M tv ال DII D ৫ F6 IBE F7 F8 & * F9 F10