After the imposition of a price ceiling (rent control), area B represents: Monthly rent (per apartment) $1,400 1,200 1,000 A 800 600 B Before Rent Control After Rent Control S Monthly rent (per apartment) S $1,400 1,200 1,000 A 800 Price ceiling 600 C.. B D D D 0 1.6 1.8 2.0 2.2 2.4 0 1.6 1.8 2.0 2.2 2.4 Quantity of apartments (millions) Quantity of apartments (millions) consumer surplus. producer surplus. consumer surplus transferred from producers. deadweight loss.

What is consumer surplus? How is it illustrated on a demand and supply diagram?

Explain why voluntary Martians improve social welfare.

During a discussion several year; ago on building a pipeline to Alaska to carry natural gas, the U.S. Senate passed a bill stipulating mat there should be a guaranteed minimum price for the natural gas that would flow through line pipeline. The thinking behind the bill was that if private firms had a guaranteed price for their natural gas, they would be more willing to drill for gas and to pay to build the pipeline. Using the demand and supply framework, predict the effects of this price floor on fine price, quantity demanded, and quantity supplied. With the enactment of this price floor for natural gas, what are some of the likely unintended consequences in line market? Suggest some policies other than the price floor that he government can pursue if it wishes to encourage drilling for natural gas and fur a new pipeline in Alaska.

Does a price ceiling change the equilibrium price?

Under which circumstances does line tax burden fall entirely on consumers?

What would be the impact of imposing a price flour below the equilibrium price?

Table 3.8 shows information on the demand and supply for bicycles, where the quantities of bicycles are measured in thousands. What is the quantity demanded and the quantity supplied at a price of 210? At what price is the quantity supplied equal to 48,000? Graph the demand and supply curve for bicycles. How can you determine the equilibrium price and quantity from the graph? How can you determine the equilibrium price and quantity from line table? What HIE die equilibrium price and equilibrium quantity? If the price was 120, what would the quantities demanded and supplied he? Would a shortage or surplus exist? If so, how large would the shortage or surplus he?

A low-income county decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at 2.40? At 2.00? At 3.50?