3. The graph below represents the market for flank steak in a specific town. Calculate the value of consumer surplus, producer surplus, economic surplus, and deadweight loss under two different scenarios: a) when the market price is allowed to prevail b) when the town passes a law setting a price ceiling for flank steak of $13 per pound Price (dollars per pound) $21 18 15 13 11 O 40 48 Supply Demand Quantity (pounds)

3. The graph below represents the market for flank steak in a specific town. Calculate the value of consumer surplus, producer surplus, economic surplus, and deadweight loss under two different scenarios: a) when the market price is allowed to prevail b) when the town passes a law setting a price ceiling for flank steak of $13 per pound Price (dollars per pound) $21 18 15 13 11 O 40 48 Supply Demand Quantity (pounds)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7 If the supply curve remains unchanged and the demand curve shifts left price increases; quantity increases price increases, decreases, or remains unchanged; quantity decreases price decreases; quantity increases, decreases, or remains unchanged price decreases; quantity decreases
7. What would be the impact in this market, of a price ceiling set at $13 a) A market surplus of 7 b) A market surplus of 10 c) A market surplus of 21 d) There would be no impact e) A market shortage of 7 f) A market shortage of 10 g) A market shortage of 21 8. What would be the impact in this market, of a price ceiling set at $16 a) A market surplus of 7 b) A market surplus of 10 c) A market surplus of 21 d) There would be no impact e) A market shortage of 7 f) A market shortage of 10 g) A market shortage of 21
Consider the following figure. What is the Consumer Surplus in this market when the market is at equilibrium? $ Demand and Supply Price $10 $9 - Quantity Demanded $8 $7 Quantity Supplied $6 $5 $4 $3 $2 $1 $0 O 1 2 3 4 5 6 7 8 9 10 Quantity
Refer to the graph to the right. After the government imposes a price of $3.50 in this market, area A represents O A. total economic surplus. O B. the producer surplus transferred to consumers. OC. the consumer surplus transferred to producers. O D. a deadweight loss. $3.50 A 3.00 2.0 Quantity (billions of bushels per year) 2.2 1.8 Price (dollars per bushel) D.
If the market price reduces from $7 to $5 what is the gain in consumer surplus? Price $20 $7 $5 O 480 850 425 O 1725 O 200 200 230 Quantity
$4.00 $3.50- $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 0 5 10 15 20 25 30 Quantity A price floor set at a price of $1.00 will result in O no change in the market outcomes. a surplus of 20 units. a surplus of 10 units. a shortage of 20 units. a shortage of 10 units. Price O O Supply Demand 35 40
3.30 3.00 Supply 2.70 2.40 2.10 Demand 1.80 1.50 1.20 0.90 0.60 0.30 50 100 150 200 250 300 350 400 Suppose that a price ceiling is set at $2.70. Which of the following is true? O a. There will be a shortage of 200 units Ob. There will be an excess supply of 100 units Oc. There will be a excess supply of 200 units Od. The ceiling is non-binding
10 If the supply curve shifts right and the demand curve remains unchanged price increases; quantity increases price decreases; quantity increases price increases; quantity increases, decreases or is unchanged price increases; quantity decreases
What is meant by deadweight loss? Why does a price ceiling usually result in a deadweight loss? Deadweight loss is at OA. net loss in output; below OB. net loss of social surplus; below O C. net loss in output; above O D. net loss of social surplus; above A price ceiling results in a deadweight loss when the ceiling price is set the market clearing price.
Consider the following figure. Price $4.00 O $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 0 5 15 Quantity A price floor set at $2.50 will result in 10 a surplus of 10 units. a surplus of 5 units. a shortage of 10 units. 20 25 30 a shortage of 5 units. no change to the market outcomes. Supply Demand 35 40
Price (dollars per pound) $21 18 15 13 11 0 40 $200 $100 $800 $60 80 Supply Demand Quantity (pounds) Figure 4-4 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of deadweight loss when the quantity is cut and the price rises to $18?
2. Below is a tabular data of price and quantity demand and quantity supply for banana que. 10 40 5 50 10 15 30 30 20 20 25 10 Qd Qs 20 40 50 Using the appropriate method for the given data set, derive the following a) demand and supply equation in terms of Q-f(P) b) equilibrium price and equilibrium quantity using the appropriate method c) compute for the consumer's surplus then graph d) compute for the producer's surplus then graph e) if the price changes from P15 to P17, how much is the change in consumer's and producer's surplus? f) what is the economic surplus? Show your solution e) if government imposed tax of P2 per unit of product in the supply side, what is the new price with tax and new equilibrium quantity with tax?