Figure 3. The graph depicts the market for fertilizer. Price 500 450- 400 350- 300 250 200- g 150- 100 50 This market would benefit from a 50 100 150 200 250 300 350 400 450 500 Quantity a. subsidy on fertilizer equal to $100. b. tax on fertilizer equal to $100. Social Cost c. tax on fertilizer equal to $50. d. subsidy on fertilizer equal to $50. Supply (Private Costs) Demand

Figure 3. The graph depicts the market for fertilizer. Price 500 450- 400 350- 300 250 200- g 150- 100 50 This market would benefit from a 50 100 150 200 250 300 350 400 450 500 Quantity a. subsidy on fertilizer equal to $100. b. tax on fertilizer equal to $100. Social Cost c. tax on fertilizer equal to $50. d. subsidy on fertilizer equal to $50. Supply (Private Costs) Demand

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Suppose market demand for gasoline is given by QD = 60-2P where QD is quantity demanded and P is the market price. Market supply is given by Qs = 4P where Qs is quantity supplied and P is the market price. (a) Find the equilibrium price and quantity in this market. (b) What is the consumer surplus and producer surplus? (c) Suppose that the government imposes a $3 tax on the good, to be included in the posted price (i.e. tax paid by suppliers). What is new equilibrium posted price? How much of that price do producers keep? What is the new market equilibrium quantity? What is the change in surplus for consumers? What is the change in surplus for producers?
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1. Here is the demand for coconuts: P 3 4 5 6 7 8 9 11 13 16 20 QD 1100 1000 900 800 700 600 500 400 300 200 100 And here is supply P 3 4 5 6 7 8 9 10 11 12 13 QS 100 200 300 400 500 600 700 800 900 1000 1100 Identify the equilibrium price, quantity, consumer and producer surplus and show them on a graph. The graph should be pretty simple here, the main issue is finding the numbers for consumer and producer surplus.
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3. Demand and supply of cigarettes in California are: Supply: Qs = 2Ps + 20 Demand: QD = 200 – PD Calculate the market equilibrium price and quantity, assuming perfect competition. a. b. California decides to tax on cigarettes to fund preschool. It recognizes that a secondary benefit of the tax would be to reduce teen smoking. Suppose taxes of $15 per carton are placed on the consumption of cigarettes. By how much will the tax increase the price consumers pay? By how much will it decrease the price producers receive?
9. The state of Minnesota rations camping sites on a first come, first served system. This has led to what America did during World War II. Venezuela to distribute food which is to what Minnesota does to and is a. An increase in the demand for camping sites and a decrease in supply; not similar; relies; prices; similar b. A surplus of camping sites and downward pressure on prices; similar to; does not rely; non-price rationing; similar I The state failing to maximize revenue from this shortage-creating system; similar to; does not rely; prices; similar d. The opportunity cost of wasted time for many would-be campers; similar to; refuses to rely; the invisible hand; similar C and D only. C. on with camping sites. e.
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Refer to Table 4-4. The table above lists the marginal cost of sunglasses by Miami Dade Shades, a firm that specializes in producing designer sunglasses. If the market price for a pair of Miami Dade Shades sunglasses is $175, producer surplus is $10. $35. $140. $230.