PRICE 16 14 12 10 00 6 4 Graph (a) Demand 1 2 3 45 QUANTITY Supply (Refer to Graph (a)) Total surplus without the tax is O $32, and total surplus with the tax is $16 $16, and total surplus with the tax is $12 $16, and total surplus with the tax is $16 O $32, and total surplus with the tax is $12 PRICE 16 14 12 10 876 432 Graph (b) Demand 2 3 4 5 6 QUANTITY Supply 7

PRICE 16 14 12 10 00 6 4 Graph (a) Demand 1 2 3 45 QUANTITY Supply (Refer to Graph (a)) Total surplus without the tax is O $32, and total surplus with the tax is $16 $16, and total surplus with the tax is $12 $16, and total surplus with the tax is $16 O $32, and total surplus with the tax is $12 PRICE 16 14 12 10 876 432 Graph (b) Demand 2 3 4 5 6 QUANTITY Supply 7

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(Figure: The Market for Season Passes to Amusement Parks) Use Figure: The Market for Season Passes to Amusement Parks. Suppose with no tax the equilibrium price is $110 and the equilibrium quantity is 250. If the government levies a tax of $30 per season pass purchased, the new equilibrium price will be and the new equilibrium quantity will be Price (per pass) S3 S₂ S₁ So $140 130 120 110 100 0 O $130; 150 O $110; 250 O $140; 100 O $120; 200 100 150 200 D 250 300 Quantity (per week) 7
Based on the graph, the resulting consumer and producer surplus at a price of $25 are, respectively, 50 45 40 35 30 25 20 15 10 + 5 Price $4,000 and $4,000. $9,000 and $4,000. O $2,000 and $4,000. S 100 200 300 400 500 600 700 800 Quantity to D -2°C
Price 27.5 CHOKRESE DEDELS 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 Supply Demand 5 10 15 20 25 30 35 40 45 50 55 60 65 70 Quantity Refer to the figure. When the price falls from $45 to $35, consumer surplus increases by $100 from new consumers entering the market. O increases by $50 from new consumers entering the market. increases by $50 from consumers who were already buying the good now paying a lower price. decreases by $50 from consumers who were already buying the good now paying a lower price.
2. Suppose that a market's demand curve is given by: Price Quantity $15 6 $14 8 $13 10 $12 12 $11 14 $10 16 $9 18 $8 20 $7 22 $6 24 $5 26 $4 28 Suppose that the price start at $6, and then drops by $2. What is the elasticity of demand over the range of this change? Ans:
Price (dollars per hour) Select one: O A. perfectly inelastic. OB. elastic. OC. inelastic. OD. unit elastic. O E. perfectly elastic. 7.00 6.60 6.00 5.60 5.00 0 1 2 3 4 5 S + tax 6 7 8 Quantity (thousands of frisbees) Figure 6.3.1 Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed. At a quantity of 4,500 frisbees, supply is
12
Figure 7-1 Demand A B D QUANTITY Refer to Figure 7-1. Suppose that the price falls from P2 to P1 Area B represents the O a. decrease in producer surplus in the market when the price increases from P1 to P2. b. decrease in producer surplus that results from a downward-sloping demand curve. Oc.consumer surplus to new consumers who enter the market. O d. additional consumer surplus to initial consumers when the price falls. PRICE
Blood oranges P (euros ton) 1,000 500 700 Q (metric tons) Blood oranges are a tasty fruit with a red-colored flesh. The Italian government subsidizes the production of blood oranges by supporting their price. If the market for blood oranges from Italy is as shown in the graph above, how much does the subsidy cost the government and, ultimately, Italian taxpayers? Select one: O a. 700,000 euros O b. 500,000 euros O c. 1 million euros O d. 200,000 euros Check Next page s page MacBook Pro
2. Using the following graph, answer the following questions. Also, show/Label your answers for parts a-e on the graph as well. Price 20 18 16 14 12 10 6. 4 6 8 10 12 14 16 Quantity 2 a. Suppose a $4 per-unit tax is imposed on the sellers of this good. What price will buyers pay for the good after the tax is imposed? b. Suppose a $4 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?
110- 100+ 90 80 70+- 60+ 0 5 40 30 Price Demand 20+ 10+ "* 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 Quantity 50 45 . Supply Refer to the above figure. The efficient price is O $80, and the efficient quantity is 50. O $70, and the efficient quantity is 60. O $70, and the efficient quantity is 100. O $50, and the efficient quantity is 60.
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6 . Consumer Surplus Ana buys an iPhone for $150 and gets a consumer surplus of $200. Her willingness to pay for an iPhone is $_________. If she had bought the iPhone on sale for $100, her consumer surplus would have been $_______. If the price of the iPhone had been $370, her consumer surplus would have been $_________.