P($) 600 510 420 270 120 120 240 312 440 Q This figure (above) shows the market for a particular type of widgets. Provide the missing information. All values should be entered as whole numbers, with zero decimals. Monetary values are to be entered in whole dollars (no cents). . In equilibrium, and without any government intervention, widgets will be bought and sold in the market for $ each. Consumer surplus will be $ . Suppose the government introduces a law that the price cannot fall below $510. This is called a price (floor / ceiling/quota / subsidy/tax) Producers would then supply , and producer surplus will be $ widgets and consumers

P($) 600 510 420 270 120 120 240 312 440 Q This figure (above) shows the market for a particular type of widgets. Provide the missing information. All values should be entered as whole numbers, with zero decimals. Monetary values are to be entered in whole dollars (no cents). . In equilibrium, and without any government intervention, widgets will be bought and sold in the market for $ each. Consumer surplus will be $ . Suppose the government introduces a law that the price cannot fall below $510. This is called a price (floor / ceiling/quota / subsidy/tax) Producers would then supply , and producer surplus will be $ widgets and consumers

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

P($)
600
510
420
270
120
440 Q
This figure (above) shows the market for a particular type of widgets. Provide the missing information. All values should be entered as whole numbers, with zero decimals. Monetary values are to be entered in whole dollars (no cents).
• In equilibrium, and without any government intervention,
widgets will be bought and sold in the market for $
each. Consumer surplus will be $
120
240 312
• Suppose the government introduces a law that the price cannot fall below $510. This is called a price (floor / ceiling / quota / subsidy /tax)
would be willing to buy
widgets. This will result in a (shortage/ surplus)
of
/ inelastic)
Total welfare in this market will then (increase / decrease)
by $
• If instead the government imposed a tax, such that the quantity demanded is 120 widgets, this means the tax would equal $
per widget. This means that $
Producers would then supply
widgets. Consumer surplus then be $
per widget. Buyers will pay $
, and producer surplus will be $
widgets and consumers
and producer surplus would be $
and sellers will receive $
of the tax. This is consistent with demand being relatively more price (elastic
The total amount of tax revenue generated by the tax is $
of the per-unit tax is passed onto buyers, with sellers absorbing $
compared to supply. Consumer surplus would be $
and producer surplus would be $
The total welfare in this market will then (increase / decrease
by $
. Consider a situation where this domestic market for widgets was unregulated and operated as price taker in the international market for widgets. If the world price was $270, this would indicate that this country has a comparative (advantage /
disadvantage)
in the production of widgets. If so, domestic firms would produce
widgets, and domestic consumers would buy
widgets. This means
widgets would be (exported to / imported from)
the international market. The net benefit of access to the international market would be $

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Step 1: Introduction

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Step 2: i) Determine Equilibrium quantity:

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Step 3: ii) Determine equilibrium price:

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Step 4: iii) Consumer surplus at equilibrium

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Step 5: iv) Determine Producer surplus

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Step 6: v) Determine the price floor:

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