P1. Consider a competitive market where daily supply and demand are QP(P) = 15 -QS(P) = 2P, where quantities are measured in thousands of units and prices are in dollars perunit. Assume that this market does not create any externalitiesbenefits are borne by the sellers and buyers directly involved in the market.2meaning that all costs and c. Going back to the initial case, suppose that supply shifts, instead of demand: let's saythat the quantity supplied decreased by 5 units at any given price. Could we haveexpressed this supply shift as a change in inverse supply? How would we have phrasedthat?Draw a new graph, showing the new equilibrium, vs the one at part (a), and discuss howprice and quantity changed (both in units and in percentage terms).d. Once again, go back to the original case. Describe the impact on the market quantityand surpluses if a price floor of $4 above the equilibrium price is imposed. Show thisoutcome and the deadweight loss introduced in a new graph.

Original Demand : Qd = 15 - P/2 Original Supply : Qs = 2P Given , Quantity supplied declines by 5…

5-2 1. Consider a competitive market where daily supply and demand are Q°(P) = 15 – QS(P) = 2P, where quantities are measured in thousands of units and prices are in dollars per unit. Assume that this market does not create any externalities – meaning that all costs and benefits are borne by the sellers and buyers directly involved in the market. and

5-2 1. Consider a competitive market where daily supply and demand are Q°(P) = 15 – QS(P) = 2P, where quantities are measured in thousands of units and prices are in dollars per unit. Assume that this market does not create any externalities – meaning that all costs and benefits are borne by the sellers and buyers directly involved in the market. and

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Problem 3 Squeak eClean produces commercial sanitizer used to clean tanker trucks that haul liquid food products such as milk. This sanitizer a commodity like any other and at the wholesale level, there are many domestic and foreign producers that compete vigorously. Suppose you have the following estimated market demand and supply functions for the sanitizer. Qd=248.08 +2.2Y – 0.6Pc+ 1.2 Ps − 4P Qs = 10 +2P In these equations, Q measures output in gallons per month (in 1,000's), P is the price per gallon of the sanitizer, Y is annual average household income (in 1,000's), Pc is an index of commodity prices, and Ps is the average price per gallon of other types of sanitizer. After gathering the latest data, you find that average household income is $36,400, the current level of the commodity price index is 110.6, and the average price per gallon of other types of sanitizers is $48.50. a. Find the current equilibrium price and quantity in this market. b. Find the equilibrium price and…
Suppose that engineers have discovered a new production process for this product which results in a significant positive externality. As a result of the positive externality, for every given output level Marginal Social Value (MSV1) is now higher than consumer’s marginal willingness to pay (also known as the Demand Curve shown as D0 below). Keep in mind that the setting is still that of a monopoly. 1) Please indicate on the graph above, assuming an absence of any government intervention to correct the positive externality and adding any necessary curve(s): The monopoly price P1 and the monopoly quantity Q1 under the condition of the (uncorrected) positive externality. (Also indicate, for comparison purposes, the original monopoly price P0 and monopoly quantity Q0.) The Socially Optimal output, QSO1. The resulting Consumer Surplus CS1, the resulting Producer Surplus PS1, and the size of Dead-Weight Loss DWL1 if there is such a loss. (No need to show the economic profits earned by the…
8) Consider a perfectly competitive market with a negative externality. What will happen to the social surplus if the government introduces a lump-sum tax on producers? A) Increase in the short run; increase in the long-run B) Increase in the short run; no change in the long-run C) Increase in the short run; decrease in the long-run D) No change in the short run; increase in the long-run E) No change in the short run; no change in the long-run F) No change in the short run; decrease in the long-run G) Decrease in the short run; increase in the long-run H) Decrease in the short run; no change in the long-run I) Decrease in the short run; decrease in the long-run J) The scenario described in this question is impossible because a perfectly competitive market cannot have a negative externality
Compared to ideal economic efficiency, when the production of a good generates external benefits, competitive markets will likely result in an output that is too A) large and a price that is too high. B) large and a price that is too low. C) small and a price that is too high. D) small and a price that is too low.
23
Question in image. Been stuck on this for hours. Thanks for your help!
6. Consider a good with a production process with fixed costs and constant marginal costs. Which of the following statements are correct? a) If marganal costs are zero the good is non-excludable. b) If marginal costs are zero the good is non-rival. c) A Pareto-efficient market equilibrium implies that the production process cannot cover its costs. d) A Pareto-efficient market equilibrium requires a price of zero.