A market is described by the following supply and demand curves: QSQS = = 4P4P QDQD = = 400−P400−P The equilibrium price is and the equilibrium quantity is . Suppose the government imposes a price ceiling of $60. This price ceiling is , and the market price will be . The quantity supplied will be , and the quantity demanded will be . Therefore, a price ceiling of $60 will result in . Suppose the government imposes a price floor of $60. This price floor is , and the market price will be . The quantity supplied will be and the quantity demanded will be . Therefore, a price floor of $60 will result in . Instead of a price control, the government levies a tax on producers of $10. As a result, the new supply curve is: QSQS = = 4(P−10)4P−10 With this tax, the market price will be , the quantity supplied will be , and the quantity demanded will be . The passage of such tax will result in .
A market is described by the following supply and demand curves: QSQS = = 4P4P QDQD = = 400−P400−P The equilibrium price is and the equilibrium quantity is . Suppose the government imposes a price ceiling of $60. This price ceiling is , and the market price will be . The quantity supplied will be , and the quantity demanded will be . Therefore, a price ceiling of $60 will result in . Suppose the government imposes a price floor of $60. This price floor is , and the market price will be . The quantity supplied will be and the quantity demanded will be . Therefore, a price floor of $60 will result in . Instead of a price control, the government levies a tax on producers of $10. As a result, the new supply curve is: QSQS = = 4(P−10)4P−10 With this tax, the market price will be , the quantity supplied will be , and the quantity demanded will be . The passage of such tax will result in .
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A market is described by the following supply and demand curves:
| QSQS | = = | 4P4P |
| QDQD | = = | 400−P400−P |
The equilibrium price is
and the equilibrium quantity is
.
Suppose the government imposes a price ceiling of $60. This price ceiling is , and the market price will be
. The quantity supplied will be
, and the quantity demanded will be
. Therefore, a price ceiling of $60 will result in .
Suppose the government imposes a price floor of $60. This price floor is , and the market price will be
. The quantity supplied will be
and the quantity demanded will be
. Therefore, a price floor of $60 will result in .
Instead of a price control, the government levies a tax on producers of $10. As a result, the new supply curve is:
| QSQS | = = | 4(P−10)4P−10 |
With this tax, the market price will be
, the quantity supplied will be
, and the quantity demanded will be
. The passage of such tax will result in .
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