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Differentiate between demand-side market failures and supply-side market failures.
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- Rank the points (K,L,M,N) according to increasing tax cost on consumers when the government imposes a tax on suppliers.If quotas lead to an increase in prices, people may be constrained to reduce their consumption of thecommodity subject to quotas or some other commodities. True FalseTrue or False? A tax of $1 on buyers always decreases the equilibrium price by $1.
- The market for used economics textbooks is perfectly competitive, with a market supply curve given by P = 6 + 2Q and market demand curve given by P = 42 – Q, leading to an equilibrium of P = 30 and Q = 12. If the government provides a subsidy of $12 per textbook, what will be the new market quantity? Determine the new CS and PS, the cost of the subsidy, and the amount of deadweight loss created by the policy.What are the limitations with the Quantity- Quality (QQ) modelConsider the market for Caribbean cruises. In the wake of the COVID-19 pandemic, the cruise companies take the following actions. First, they implement testing and tracing programs to limit the potential of COVID outbreaks on ships to occur and to spread. Second, they engage in widespread advertisement of their new and state of the art safety precautions. Using a generic model of supply and demand, show and describe how you would expect these initiatives would affect the market for cruises. Be sure to explain why which curves are shifting, and discuss changes to market equilibrium.
- In 1996, Florida voted on (and rejected) a $0.01-per pound excise tax on refined cane sugar in the Florida Everglades Agricultural Area. Swinton and Thomas (2001) used linear supply and demand curves (based on elasticities estimated by Marks, 1993) to calculate the incidence from this tax given that the market is competitive. Their inverse demand curve was p=1.787 -0.0004641Q, and their inverse supply curve was -0.4896 + 0.00020165Q. p=- (Hint: The incidence that falls on consumers is the difference between the price with and without the tax divided by the tax.) Calculate the incidence of the tax that falls on consumers for a competitive market. The incidence that falls on consumers in a competitive market is 70.0 percent. (round your answer to one decimal place) If producers joined together to form a monopoly, and the supply curve is actually the monopoly's marginal cost curve, what is the incidence of the tax? The incidence that falls on consumers is percent. (round your answer to…Consider that the retail market for sanitizing wipes in a small locale is described by the follow demand and supply equations respectively: P = 8.40 - 0.02Q and P = 6.60 + 0.01Q where P is the price in dollars and Q is the quantity measured in thousands per week. The market is currently in equilibrium. (Question 8 of 8) Now consider than an unexpected viral outbreak led to consumers ensuring that much more surfaces (counter tops, door handles, etc.) are clean and sanitized. At the same time, the government's demand for sanitizing wipes at various public institutions (hospitals, schools, etc.) has impacted the supply of sanitizing wipes in the retail market. Although the government is neither a buyer nor seller in the retail market, their requests for sanitizing wipes does affect how many sanitizing wipes firms are able to supply in the retail market. The market for sanitizing wipes adjusts afterwards and the market is in equilibrium. Suppose that after the market for sanitizing wipes…Match each type of good with its associated market efficiency outcome
- Demand-side market failure is when there is a shortage of a good in the market. True FalsePlease refer to the background information below to answer the following three questions. Consider the following supply and demand schedule of chocolate. Price ($ per unit) Quantity Demanded (units) Quantity Supplied (units) 295 95 120 40 45 270 245 50 55 60 145 170 195 220 195 65 70 170 220 145 245 75 120 95 270 295 80 85 70 320 90 45 20 345 95 370 33. Suppose initially the chocolate market is in an unregulated equilibrium. If the government imposes a tax of $10 for cach unit of the chocolate sold, the new equilibrium price paid by the consumers will be $[ Answer33 ]. 34. Given the above information, the government's tax revenue will be $[ Answer34 ]. 35. Suppose initially the chocolate market is in an unregulated equilibrium. If the government imposes a subsidy of $10 for each unit of the chocolate sold, the new equilibrium quantity would be [ Answer35 ] units.Please refer to the background information below to answer the following three questions. There are two groups of consumers, A and B, for herbal medicine with the following demand relations respectively: Group A: P 430 -0.6Q Group B: P=570 -0.1Q The market supply of herbal medicine is P=215+0.6Q where P is price per unit of herbal medicine (in dollars), and Q is quantity of herbal medicine. 8. Suppose the market is free of government intervention. We can compute that the market equilibrium price is [Answer08A = 519.29] dollars per unit, and the market equilibrium quantity is [ Answer08B507.14] units. 9. Suppose the central planner forces the economy to produce and exchange herbal medicine with the quantity of 953 units. We will expect a minimum welfare loss of [Answer0969576.01] dollars when compared to the market without intervention. 10. Suppose the central planner wants to achieve the same quantity (953 units) using taxation or subsidy. The central planner should impose a [Answer…