Consider a free market with demand equal to QQ = 900 − 10PP and supply equal to QQ = 20PP. Now the government imposes a $15 per unit subsidy on the production of the good.
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Consider a free market with demand equal to QQ = 900 − 10PP and supply equal to QQ = 20PP.
Now the government imposes a $15 per unit subsidy on the production of the good. What is the consumer
surplus now? The
is the size of this loss? Demonstrate in a graph.
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- Consider the attached graph showing the supply and demand for rental apartments around the UH. campus. If the government were to subsidize housing by $1000 per unit per month, then the quantity of rental apartments would____ (increase or decrease) by____ thousand units. The rental price received by landlords inclusive of the subsidy would ____(increase or decrease) by_____ dollars per month while the price paid by tenants, net of the subsidy, would____ (increase or decrease) by____ dollars per monthThe following graph depicts a market where a tax has been imposed. Pe was the equilibrium price before the tax was imposed, and Qe was the equilibrium quantity. After the tax, PC is the price that consumers pay, and PS is the price that producers receive. QT units are sold after the tax is imposed. NOTE: The areas B and C are rectangles that are divided by the supply curve ST. Include both sections of those rectangles when choosing your answers. What is the amount of the tax, as measured along the y axis? PC + PS Pe – PS PC – PS PC – P* Pe + PSConsider the market for commercial fans. The following graph shows the demand and supply for commercial fans before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of commercial fans in the absence of a tax. Then use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. Suppose the government imposes an excise tax on commercial fans. The black line on the following graph shows the tax wedge created by a tax of $50 per fan. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol) to shade the area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area representing total producer…
- Consider the market for mountain bikes. The following graph shows the demand and supply for mountain bikes before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of mountain bikes in the absence of a tax. Then use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. (screen shot 1) Suppose the government imposes an excise tax on mountain bikes. The black line on the following graph shows the tax wedge created by a tax of $80 per bike. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol) to shade the area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area…Use the figure below to answer the following question. Price A B E LL F S St S K K Quantity D What area represents society's total surplus after the government imposes the excise tax on the market?The accompanying graph depicts a hypothetical market for salt. Suppose that an excise or commodity tax is levied on consumers in an attempt to curb blood pressure problems. Show the effect of the tax by shifting the appropriate curve(s). Macmillan Learning Who has the larger tax burden? Consumers (buyers) Producers (suppliers) The tax burdens are equal Why is the tax burden as you described in in the question above? Consumers are the ones paying the tax. Demand is less elastic than supply. Both supply and demand are perfectly elastic. Supply is less elastic than demand. Demand is more elastic than supply. Price (S/kilogram) 9 3 Market for Salt D 4 5 Quantity (in kilograms). S 10
- Suppose the equations below represent the market supply and demand for cellular service. QD = 50 – 0.25P QS = 2P – 76 a. Graph the supply and demand curves, and label the equilibrium quantity and price. b. Calculate the amount of Consumer Surplus and Producer Surplus in this market. c. Suppose the government enacts a per-unit tax of $9 for each unit sold. Illustrate the effect of this tax in your graph of the market for cellular service, and calculate the new market price and quantity sold. d. Calculate the amount of deadweight loss associated with this per-unit tax. e. Calculate the share of the tax burden that the sellers bear. f. Briefly explain why there is a relationship between the slopes of the supply and demand curves, and the tax burden on each side of the market.Refer to the figure below. What is the consumer surplus generated at a price of $150 per game console? Instructions: Use the tool provided “CS” to illustrate this area on the graph. Consumer surplus: $ ____ What is the producer surplus generated at a price of $150 per game console? Instructions: Use the tool provided “PS” to illustrate this area on the graph. Producer surplus: $ ____ e. What is total economic surplus at a price of $150 per game console? Economic surplus: $ _____ f. What is the economic surplus generated if the market were in equilibrium? Instructions: Use the tool provided “ESeq” to illustrate this area on the graph. Economic surplus in equilibrium: $ ______Question 13 Homework • Answered Refer to the supply and demand diagram below. If an subsidy of $3 per unit is introduced in this market, the price that consumers pay will equal and the price that producers receive net of the subsidy will equal 2$ 12 11 10 9 8 7 6 4 3 D: 2 Q 6 8 10 12 14 16 18 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. $2; $5. Your answer b $3; $6. $4; d $5; $8. Answered - Incorrect • 1 attempt left Change your responses to resubmit 1 Resubmit
- The demand for ice cream is given by QD = 200 – 20P and the supply of ice cream is given by QS = - 100 + 40P. The quantity is measure in gallons of ice cream. - Calculate the consumer surplus, producer surplus, and total surplus at the market equilibrium. Now assume that the government decides to set the price of ice cream at $ 7.00 per gallon. Would this create a surplus or a shortage in the ice cream market? Calculate the surplus (or shortage). Calculate the consumer surplus, producer surplus, and total surplus at the new $ 7.00 price. What happened to each after the intervention of the government in the ice cream market? Calculate the deadweight loss after the imposition of the $ 7.00 price. Compare this to the deadweight loss associated with the market equilibrium. In your own words, explain why this deadweight loss is a measure of the inefficiency in the market created by the government intervention.The demand and supply of widgets is given below. Q is quantity, and P is price of widgets Q = 5000 – 6P Q = 1000 + 2P How much is equilibrium quantity and equilibrium price (show me your work) If there is a price control of $700 imposed by the government for widgets. What type of price control is this called? Does this type of price control cause a shortage or surplus, and how much is it. Draw the Demand and Supply, and show the point for part a and b.Consider the market for air conditioning units. The following graph shows the demand and supply for air conditioning units before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of air conditioning units in the absence of a tax. Then use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. 360 Demand 320 280 K 240 200 160 Supply PRICE (Dollars per air conditioner) 400 120 PRICE (Dollars per air conditioner) 80 40 0 400 360 320 280 Suppose the government imposes an excise tax on air conditioning units. The black line on the following graph shows the tax wedge created by a tax of $160 per air conditioner. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point…
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