Q. 30 Consider the following model where S is subsidy given to consumers by thegovernment.Y = C+I+GC=a+bY*Y =Y +S-tYI =I +aYG=G+S+tYWherea100.5200.051001000.1Equilibrium output is equal to:А.200В.400C.450 D.600Е.none of the above

In every economy, there are various entities which conducts various activities, ranging from the…

Q. 30 Consider the following model where S is subsidy given to consumers by the government. Y = C+I+G C=a+bY" Y =Y+S-tY I =ī +aY G=G+S+tY Where a t 10 0.5 20 0.05 100 100 0.1 Equilibrium output is equal to: А. 200 В. 400 С. 450 D. 600 Е. none of the above

Q. 30 Consider the following model where S is subsidy given to consumers by the government. Y = C+I+G C=a+bY" Y =Y+S-tY I =ī +aY G=G+S+tY Where a t 10 0.5 20 0.05 100 100 0.1 Equilibrium output is equal to: А. 200 В. 400 С. 450 D. 600 Е. none of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
Suppose Home is a small exporter of wheat. At the world price of 100 US dollars per tonne, Home growers export 20 tons of wheat. Now suppose the Home government decides to support its domestic producers with an specific export subsidy of 40 US dollars per tonne. Use Figure 1 to answer the following questions: Figure 1: Supply and Demand for Wheat at Home Home price 140 100 X 10 20 40 50 Supply Demand Quantity (a) Explain why consumer and producer surplus can be used to gauge the change in welfare caused by the export subsidy on individuals and firms.
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In Figure 1, suppose the marginal value for gasoline falls by $6 for every quantity demanded for all gas stations in the market. Next, assume that the government enacts a price ceiling of $2. What is the loss in consumer surplus? A) $6B) $2C) $12D) There is no consumer welfare loss because prices are lower.E) There is not enough information to calculate.
Title Suppose that the fixed costs of 0.72 consist of an attributable fixed cost for good 1 of 0.12, an attributable cost of 0.12 for good 2, and a common fixed cost of 0.48. Are the Ramsey prices subsidy free? Description Suppose that there are two products. The demand function for good i is Qi = 1 − bi Pi where b1 = 1 and b2 = 0.5. There are no variable costs of production, but there is a common fixed cost equal to 0.72. (a) Show that the inverse demand curves are Pi = (1 − Qi )/bi . Using the inverse demand curves, show that consumer surplus in market i is CSi = Q2 i /(2bi ). (b) Let W = CS1(Q1) + CS2(Q2). Then iso-welfare contours are combinations of Q1 and Q2 that give the same level of W. Graph three iso-welfare contours in Q1, Q2 space. (c) Write the firm’s zero-profit constraint in terms of Q1 and Q2. Sketch the firm’s zero-profit constraint in Q1, Q2 space. (d) Using (b) and (c), graphically derive the quantities that maximize W subject to the firm breaking even.…
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Consider a market where supply and demand are given Qx^s=-10 +Px and Qx^d=56-2Px. Suppose the government imposes a price floor of $25, and agrees to purchase any and all units concumers do not buy at the floor price of $235 per unit. a. Determine the cost to the government of buying firms' unsold units. b. Compute the lost social welfare (deadweight loss) that stems from the $25 price floor.