Once again, go back to the original case. Describe the impact on the market quantity and surpluses if a price floor of $4 above the equilibrium price is imposed. Show this outcome and the deadweight loss introduced in a new graph. What about if a price ceiling of $4 below the equilibrium price is imposed? How are consumers and producers each affected, and by how much does total surplus decrease? Show the relevant areas in a new graph. What accounts for the difference between the outcomes at (d) and (e)? Compare the quantity changes, as well as the amounts of deadweight loss created.

Once again, go back to the original case. Describe the impact on the market quantity and surpluses if a price floor of $4 above the equilibrium price is imposed. Show this outcome and the deadweight loss introduced in a new graph. What about if a price ceiling of $4 below the equilibrium price is imposed? How are consumers and producers each affected, and by how much does total surplus decrease? Show the relevant areas in a new graph. What accounts for the difference between the outcomes at (d) and (e)? Compare the quantity changes, as well as the amounts of deadweight loss created.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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am. 163.
The graph below represents the market for flank steak in a specific town. Calculate the value of consumer surplus: When the market price is allowed to prevail, and When the town passes a law setting a price ceiling for flank steak of $13 per pound, what is the value of the deadweight loss after the town passes that law?
10. Assume there are 100 bee keepers raising honeybees in North Carolina. Each bee keeper has a supply curve of qs = P/2 - 1, where quantity is measured in thousands of jars of honey. Assume market demand for honey can be represented by QD = 20 - 10P. a. What will be the price and quantity in the market? Draw a supply and demand diagram and indicate the equilibrium price and quantity while making sure to label your axes and intercepts. Now assume that each jar of honey produced generates $2 of benefit to society from the honeybees pollinating the crops and flowers at nearby farms. b. Label the MSC, MSB, MPC, and MPB curves in this market on your diagram from part (a). Calculate and label the efficient quantity of honey in the market. Does the market over-produce or under- produce? I c. Explain why it might be a good idea for the government to intervene in this market. What would be an optimal policy for them to enact and why? MacBook Air
Suppose the government sets a price ceiling above the equilibrium price for milk. Which of the following will be the result?
Suppose that the demand curve for cheddar cheese is given by P = 100 - 3Q, and the supply curve is given by P = 10 + 2Q. What is the equilibrium quantity in this market? 18 What is the equilibrium price in this market? (note: please do not include a $) 46 What is the producer surplus in this market when it is in equilibrium?
Consider a market where demand and supply satisfy the following equations QD = 12 – 2 P,e Qs = 2P. a) Find the current equilibrium price and quantity. b) What is the total producer surplus if the market is in equilibrium? - The government is considering a minimum price policy to increase producer surplus.- c) Explain by means of graphs how the introduction of a price floor can increase producer surplus. d) Find the (optimal) price floor that maximizes producer surplus.
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Please refer to the image below and answer question 10
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18-19. In the competitive market for white sugar, consumer demand is given by P=100-0.050 and suppliers' behaviour is represented by the supply curve of P=1+0.005Q, where P is measured in dollars and Q is measured in kilos per month. Questions 17 through 19 refer to this market. 18. Imagine now that the government imposes a price ceiling of $5.00 per kilo on sugar, and that the ceiling is obeyed by all market participants. In the resulting equilibrium the total number of kilos of sugar exchanged in the market is equal to: A) 2100 G) 800 B) 2000 H) 600 A) $5 G) $70 C) 1900 I) 400 B) $10 H) $80 19. Suppose suppliers obey the price ceiling but consumers sell sugar on a black market. What will the black market price for sugar be? D) 1400 E) 1200 J) None of the above C) $10.50 I) $21 E) $50 F) 1000 D) $40 J) None of the above F) $60