Before answering the following questions, illustrate on a graph, how the tax affects the short-run individual and market supply curves; looking at the graph, can you tell if the equilibrium price increases or decreases in the short-run? What happens to firms profits? How much should the price increase in the long run? After the tax is introduced, how many cafés leave the market in the short run? After the tax is introduced, do cafés shut down in the short run? yes O no In the short-run equilibrium, what is the new price of a cup of coffee? What is the profit of each firm?

Before answering the following questions, illustrate on a graph, how the tax affects the short-run individual and market supply curves; looking at the graph, can you tell if the equilibrium price increases or decreases in the short-run? What happens to firms profits? How much should the price increase in the long run? After the tax is introduced, how many cafés leave the market in the short run? After the tax is introduced, do cafés shut down in the short run? yes O no In the short-run equilibrium, what is the new price of a cup of coffee? What is the profit of each firm?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter3: Market Demand And Supply

Section: Chapter Questions

Problem 10SQP

See similar textbooks

Similar questions

Identify the demand or supply determinant(s) that changes and explain how the equilibrium price and equilibrium quantity in a purely competitive market will change in each of the following situations. Draw the appropriate demand and supply curves showing the change. (Each graph should have an equilibrium point before the change as well as after; be sure to label all parts of the graphs). a. Product: New homes -wages increases so consumer incomes increase and supply does not change b. Product: French cheese- A tariff is removed from the importation of French cheese while demand remains the same. C. Product: eat-at-home pizza- consumers desire for eating at home increases and the cost of flour (used to make pizza) decreases
Hello please answer 5 and 6 Use the attached graph #2 to model the following. What is the price and quantity of this market? Price is 14.00 quantity is 250 units Is this a competitive market or monopoly? Monopoly market What is the profit or loss in this market for this firm? Profit of 2,500.00 What is the deadweight loss in this market, if any? Deadweight loss $100.00 In this market the demand curve is what? Short run Long run In this market the supply curve is what? Short run Long run
Consider supply in the long run. Assume that a specific tax is imposed on a good that was previously untaxed. How will the incidence of this tax change as time passes?
QUESTION 8 In the above figure, the competitive (i.e. unregulated) market equilibrium quantity is? (Note #1: the x- axis is in thousands, so make sure to write out the entire number, i. e. 10 thousand as "10000") (Note #2: marginal benefit curve (MB) also represents demand)uppose the market demand for a good takes the form: Q subscript D equals 120 minus 1 fourth P and market supply takes the form: Q subscript S equals negative 30 plus 1 half P and production of each unit causes $30 in (external) damage. What is total surplus in this market? (Note: with external damages the overall benefit from a market is often referred to as "social welfare" instead of total surplus. Regardless, to answer this question subtract total external damages from consumer and producer surplus) QUESTION 8 40 40 S-MSC Price (dollars per vaccination) 20 20 30 30 50 60 10 10 MSB MB 0 10 20 30 40 50 60 Quantity (thousands of vaccinations per year) In the above figure, the competitive (i.e. unregulated) market…
When I was studying Intermediate Microeconomics recently, I found this statement: "For markets with inelastic demand and supply curves, most movements will be in prices, not quantity. For markets with elastic demand and supply curves, most movements will be in quantity, not price." Discuss whether this statement is true, false, or uncertain use Intermediate Microeconomic way. Please help me solve my doubts.
Draw a graph of a competitive market in equilibrium, and illustrate a decrease in Supply. Carefully label everything. Use the "E" labels to label the equilibrium points. As a result of the shift, what will happen to price and quantity? Carefully explain the mechanism that causes price to adjust after the shift, and illustrate it on your graph. Carefully label everything on the graph. Use the boxes below to type your answer. If you reach the line that divides the left side from the right side, start a new line in the next box down. If you do not use all of the boxes, put an "x" in the boxes you do not use.
Suppose the demand and the supply for lumber (harvested wood processed in a sawmill) used for construction in Australia are given byQD =100 – 2PQS = 1/2PAssume also that the market is perfectly competitive. 7. Steel is a substitute for lumber in construction. Now suppose the price for steel rises. Use a graph of supply and demand to show what happens in equilibrium. Show changes relative to the original equilibrium you found. 8. back to the orginial graph once more, the government introduces a subsidy of s=5 per unit of lumber transacted in the market. Calculate the new equilibrium quantity and the price paid by consumers and received by producers.9. Given the subsidy in 8, calculate and illustrate in a graph the consumer surplus, producer surplus and subsidy expenditure.10. Calculate the deadweight loss caused by the subsidy in 8 and illustrate it in a graph. 11. Who benefits more from the subsidy, consumers or producers? Why?
Suppose Farmer Smith grows apples. The enitre market for apples is shown in the figure below. Assume the market for apples is perfectly competitive. Price of apples (dollars per basket) 22- 20- 18- 16- 14- 12- 10- 8- 6- 4 2- 0- ****** Supply Demand 24 6 8 10 12 14 16 18 20 22 Quantity of apples (baskets per year in billions) Use the line drawing tool to draw the demand curve for farmer Smith's apples. Label this line 'Demand for Smith apples'. Carefully follow the instructions above, and only draw the required objects. CH Price of apples (dollars per basket) 22- 20- 18- 16- 14- 2- 0 2 4 6 8 10 12 14 16 18 20 Quantity of apples (baskets per year in 1000s)
The cost of production of a good can increase, which will cause profits to decrease. Will it cause the supply curve to increase or decrease?
Hey I am wondering if you can draw me a graph that relates to what i wrote below... Please include a graph or two showing the economic effects of the war on the production of agricultural things and explain why what is happening is happening. As a result of Russia's invasion of Ukraine, agriculture in both Russia and Ukraine was severely disrupted. This represents a decrease in supply. Because demand is up we can say that we know that the equilibrium price will increase. Because there is uncertainty surrounding the conflict and the availability of agricultural commodities this has caused an increase in demand for these commodities. In class, I learned that if supply decreases and demand increases at the same time, the combined effects would be a significant rise in the equilibrium price. Graph one shows the effect of a decrease in supply on price, and graph two shows the combined effect of a decrease in supply and an increase in demand on price. As a result of decreased supply and…
Suppose in a small town called Utopia live 200 children and 300 adults. The only entertainment in the town is a theatre. The theatre has a fixed cost of 2000 dollars for preparing each play. However, once the play is ready, then selling an additional ticket has no cost at all. Demand for adult citizens and children are given in the following table What price would this theatre company charge for an adult ticket and for a child’s ticket? How much will it make?
Say whether the following statement makes Good Economic Sense, is Complete Economic Nonsense, or is Somewhere In Between: “The products for which demand is the greatest will also be the products that are the most profitable to produce.”