For private goods allocated in markets, a) prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. b) prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. c) government guides the decisions of buyers and sellers and these decisions lead to an efficient the allocation of resources. d) the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.
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- ase:Most of the world’s governments have struggled to handle the issue of allowing consumption of forbidden goods, such as alcohol, cigarette, tobacco etc. to its population. Various methods of control have been exercised world over, such as, complete ban on these goods, a restricted consumption regime with quota on consumption or quota on selling, price floors keeping the price of these goods high up in order to reduce demand and imposing high taxes to generate same effect. None of thee seem to have worked to control the availability and consumption of such goods by the society. These are called social bads, as they not only are harmful for the person consuming them, there are external effects on others, such as family and friends and the larger society.In Rampur, Alcohol are forbidden, so people trade Alcohol bottles in a black market. The Alcohol demand is QD = 12 − P , and the supply is Qs = 2P(a) Find the equilibrium price and quantity in the black market.(b) The government…Which of these is a negative production externality? An airline manufacturer must hold up production of a plane at great cost due to delays in its global supply chain. A cereal manufacturer suffers losses due to a drought and unexpected increases in market prices of grains that it uses in its cereals. O Consumers complain to the wrong regulators about price gouging in gasoline markets. A producer of lead for batteries that are used nationwide emits noxious gases in its factory town and local people are getting sick. Thch SaveMost of the world’s governments have struggledto handle the issue of allowing consumption of forbiddengoods, such as alcohol, cigarette, tobacco etc. to its population. Various methods of control have been exercised world over, such as, complete ban on these goods, a restricted consumption regime with quota on consumption or quota on selling, price floorskeeping the price of these goods high up in order to reduce demand and imposing high taxes to generate same effect. None of thee seem to have worked to control the availability and consumption of such goods by the society. These are called social bads, asthey not only are harmful for the personconsuming them, there are external effects on others, such as family and friends and the larger society.In Rampur, Alcoholare forbidden, so people trade Alcohol bottlesin a black market. The Alcoholdemand is QD = 12 − P , and the supply is Qs = 2P(a)Find the equilibrium price and quantity in the black market. (b) The government becomes aware of…
- 1.1 (Select any/all that apply) In the absence of market failures, the market equilib- rium will maximize a) the price at which producers can sell some amount of the good b) producer profit from that market c) total benefit to society d) the distributional equity of goods and services in that market e) the sum of producer and consumer surplus 1.2 (Select any/all that apply) The term market failure refers to a) an unexpected event which reduces supply abruptly b) aggressive competition among firms c) a firm that is forced out of business because of an economic crisis d) whenever producers are made better off than consumers e) a market that fails to allocate resources in an economically efficient wayWhich of the following is least likely to be associated with market failure, and is consequently least likely to require any form of state regulation or intervention? OA Hake fishing off the west coast of South Africa OB. The provision of education services in government schools OC The provision of education services in private schools D. The market for fast foods Fi Previeus page E s heretosDefine the concept of a negative externality and explain the nature of the negative externality in the fishing markets i.e. describe how the self-interested actions of a fishing company might adversely affect third parties without their consent.
- 4) Which of the following is the problem with using price and quantity controls to decrease obesity rates? A) setting a quota too low would lead to a black marketB) setting a price floor too high would lead to a black marketC) setting a price ceiling too high would be ineffectiveD) they are not be effective due to substitutabilityE) setting a price floor too low would be ineffective 7) The problem of market failure associated with imperfect information was government mandated food labels. The ineffectiveness of this solution is supported by the results of studies presented in lecture, in particular the 2011 Duke taco time study. A) True B) False 8) the application of an excise tax cause A) the MC curve to shift downward B) the MC curve to shift upward C) the MB curve to shift downward D) the MB curve to shift upward 9) In Edward Glaeser’s model of hatred, it’s important for the suppliers of hate to arrange for their audience (X) to have easy access to the hated group (Y) so that…A market is described by the following supply and demand curves:Supply: P=0.25QDemand: P=300-0.75Q(a) Solve for the equilibrium price and quantity and calculate the total economic surpluswith a diagram.(b) Suppose government sets a price floor of $90. With the price regulation, calculatewith a diagram the sizes of shortage (or surplus), consumer surplus, produce surplusand deadweight loss.(c) Instead of a price floor, government regulates the price by a price ceiling of $90.Predict the change of market efficiency if the government imposes a price ceiling of$90.(d) Instead of a price control, government levies a $20 excite tax on producers. Formulatethe new supply curve and solve for the new equilibrium price and quantity. Calculatewith a diagram the tax revenue and the tax incidences for both producers andconsumers. Discuss how buyers and sellers share the tax burden by applying relevanttheories and an appropriate diagram.Most of the world’s governments have struggled to handle the issue of allowing consumption of forbidden goods, such as alcohol, cigarette, tobacco etc. to its population. Various methods of control have been exercised world over, such as, complete ban on these goods, a restricted consumption regime with quota on consumption or quota on selling, price floors keeping the price of these goods high up in order to reduce demand and imposing high taxes to generate same effect. None of thee seem to have worked to control the availability and consumption of such goods by the society. These are called social bads, as they not only are harmful for the person consuming them, there are external effects on others, such as family and friends and the larger society.In Rampur, Alcohol are forbidden, so people trade Alcohol bottles in a black market. The Alcohol demand is QD = 12 − P , and the supply is Qs = 2P(a) Find the equilibrium price and quantity in the black market. (b) The government becomes…
- Demand A D ATC MC MR Quantity of Sparkle Toothpaste Indicate which of the labeled areas represent consumer surplus derived from the purchase of Sparkle toothpaste or deadweight loss relative to the efficient level of output. A B D Consumer Surplus Deadweight Loss Suppose the government required Sparkle to produce the efficient level of output. Which of the following describes what would happen to the firm and Sparkle's customers? O Sparkle would earn negative profit, forcing it to shut down, and Sparkle's customers would gain no consumer surplus. O Sparkle would earn positive profit and increase production, boosting consumer surplus. O Sparkle would earn zero profit, and its customers would be just as well off as before. Price, Cost, RevenueProblem 05-02 (algo) a. On the basis of the three individual demand schedules below, and assuming these three people are the only ones in the society, determine the collective demand schedule on the assumption that the good is a public good. Instructions: Enter your answers as a whole number. Individual 1 Individual 2 Individual 3 Demand for Publlc Good Book Price Qd Price Qd Price Qd Price Qd $8 $8 $8 2 2 Print 6. 6. 2 3 5. 2 3 4 rences 4. 4 .5 3. 4. 3 6 2 2 2. 6 7. 1 6 8 b. Use the public demand schedule above and the following supply schedule to ascertain the optimal quantity of this public good. Bupply of Public Good Price $21 $18 10 $15 $12 4. $9 $6 $3 61 Optimal quantity=Use the following diagram in which S is the market supply curve and S, is a supply curve comprising all costs of production, including external costs, to answer the question below. Price Quantity Assume that the number of people affected by these external costs is large. Without government interference, this market will reach a(n) A) higher price than is consistent with an optimal allocation of resources. B) optimal allocation of society's resources. C) overallocation of resources to this product. OD) underallocation of resources to this product.