27 9. DEADWEIGHT LOSS WITH PRICE CONTROLS If an equilibrium position is less than perfectly efficient, the loss in total surplus (CS + PS) is termed "deadweight loss." If D and S are linear, then DWL is measured as the area a triangle, the "loss triangle." The area of a triangle is half of (base X height). > Suppose that demand and supply equations in a competitive market are: Demand: P = 30 – 0.6Q Supply: P = 6 + 0.4Q a. Compute the market equilibrium. (Q*, P*) = b. Calculate consumer surplus and producer surplus at the market equilibrium. Producer surplus (PS) is the area above the supply curve and below the price. CS* = PS* =. c. Suppose that a price floor of Pr = 24 is imposed by the government. Find the equilibrium quantity with the price floor. Then calculate consumer surplus, producer surplus, and deadweight loss at the regulated equilibrium. %3D %3D CS: = PS =- DWLr =

27 9. DEADWEIGHT LOSS WITH PRICE CONTROLS If an equilibrium position is less than perfectly efficient, the loss in total surplus (CS + PS) is termed "deadweight loss." If D and S are linear, then DWL is measured as the area a triangle, the "loss triangle." The area of a triangle is half of (base X height). > Suppose that demand and supply equations in a competitive market are: Demand: P = 30 – 0.6Q Supply: P = 6 + 0.4Q a. Compute the market equilibrium. (Q, P) = b. Calculate consumer surplus and producer surplus at the market equilibrium. Producer surplus (PS) is the area above the supply curve and below the price. CS* = PS* =. c. Suppose that a price floor of Pr = 24 is imposed by the government. Find the equilibrium quantity with the price floor. Then calculate consumer surplus, producer surplus, and deadweight loss at the regulated equilibrium. %3D %3D CS: = PS =- DWLr =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Demand and supply in a market are described by the equations Q.= 1800 + 240P Q= 3550 - 266P a) Solve algebraically to find equilibrium P and Q b) Draw the demand and supply curve and show equilibrium
A small province is planning to levy a hotel room tax of $20 per night on hotel owners to recover some of the costs of government services associated with nonresidents. The average price of a standard hotel room in this province before the implementation of the tax is $150 per night. Market analysts predict that the average price of a hotel room will increase to $155 per night after the tax. a) Use the supply and demand model to illustrate and explain how the proposed tax on hotel operators will impact the market for hotels. Clearly show in your diagram and explain in words the impact on price and quantity of hotel rooms as well as the revenue raised and any deadweight loss caused by the tax. b) Discuss how tax incidence is shared between buyers and sellers. What share of this tax is paid for by buyers, and what share is paid for by sellers? c) What do your findings in part b tell you about the price elasticity of demand for hotel rooms compared to the price elasticity of supply?…
QUESTION 4 Suppose the demand curve is given by P = 216 - 2Q and the supply curve is given by P = 5Q. Suppose the supply curve shifts left by 20. How much lower is total surplus in the new equilibrium than in the old equilibrium? Give your answer to 2 decimal places.
What is the producer surplus in the market equilibrium? Again, the equations are: Q = 3P-90 Qd = 400 - 5P
1. Given a demand function Qd =60 - 10P and a supply function Qs = 10P, find the equilibrium quantity and price. Answers are in numbers. A. Q=20; P = 2 B. Q=30; P = 3 C. Q=20; P = 3 D. Q = 30; P = 2 2. A market is modeled by the following demand and supply functions: Qd= 60 - 10P and Qs = 10P. If P-$5, determine if there is an equilibrium, excess supply (surplus), or excess demand (shortage). Answers are in numbers. A. 0 (Equilibrium) B. 20 (Surplus) C. 40 (Surplus) D. 20 (shortage) 3. An increase in both demand and supply will A. Increase quantity, and increase price B. Decrease quantity, and decrease price C. Increase quantity, and may increase, reduce or leave price unchanged D. Decrease quantity, and may increase, reduce or leave price unchanged 4. A decrease in demand and an increase in supply will A. Reduce price but may increase, decrease, or leave quantity unchanged. B. Increase price but may increase, decrease, or leave quantity unchanged. C. Reduce price but increase quantity…
10. Assume there are 100 bee keepers raising honeybees in North Carolina. Each bee keeper has a supply curve of qs = P/2 - 1, where quantity is measured in thousands of jars of honey. Assume market demand for honey can be represented by QD = 20 - 10P. a. What will be the price and quantity in the market? Draw a supply and demand diagram and indicate the equilibrium price and quantity while making sure to label your axes and intercepts. Now assume that each jar of honey produced generates $2 of benefit to society from the honeybees pollinating the crops and flowers at nearby farms. b. Label the MSC, MSB, MPC, and MPB curves in this market on your diagram from part (a). Calculate and label the efficient quantity of honey in the market. Does the market over-produce or under- produce? I c. Explain why it might be a good idea for the government to intervene in this market. What would be an optimal policy for them to enact and why? MacBook Air
Suppose the demand curve is given by P = 433 - 2Q and the supply curve is given by P = 5Q. Suppose the supply curve shifts left by 20. How much lower is total surplus in the new equilibrium than in the old equilibrium? Give your answer to 2 decimal places. Give me calculation and full explanation and correct answer otherwise i give multiple down vote Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
8. Given the following set of demand and supply functions, find the equilibrium price and quantities. (i) Qd = 450 - 3P; Qs = 50+ 5P, (ii) Qd = 500 - 3P; Qs = 100; (iii) Qs = 30 + 1/2p, find Qs, when P =2. P = 4, P = 6, p = 10 9. A) Briefly discuss the microeconomics goals b) With the help appropriate diagram briefly discuss a change in QTY demanded & change in demand.
Converse the demand
1. Suppose that the market of iPhone 12 has recorded the following equations for: Q= 1000-20P and Q= 100+10P a) Calculate the equilibrium price in $ per unit and quantity for the market? b) Draw the graph of the market equilibrium for iPhones? c) Find the new market equilibrium if the price per unit doubles than its initial level (in a)?
Use the graph below to answer the questions. Price $7 $6 $4 $2.50 Loss MC ATC MR₁ MR₂ 100 125 140 Firm's quantity (q) Suppose a firm in a competitive market faces a market price of $6. If the firm produces a level of output to maximize profit, how much profit does the firm earn? ✪ $ 840 If the market price drops to $4, the firm starts losing money. How much money does it lose? $ 280