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
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
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?
Table 5 Price $0 $5 $10 $15 $20 $25 Quantity Quantity Demanded Supplied 250 0 200 75 150 150 100 225 50 300 0 375 Refer to Table 5. Which of the following statements is correct? Select one: O a. A price floor set at $20 will not be binding. O b. A price floor set at $20 will be binding and will result in a surplus of 100 units. O c. A price floor set at $20 will be binding and will result in a surplus of 250 units. O d. A price floor set at $20 will be binding and will result in a surplus of 50 units.