Suppose that currently 4 million automobiles are imported into the U.S. and the average price of those automobiles is $25,000. Further suppose that Congress passes legislation approving a 5 million annual quota on imports, which is signed into law by the President. Which of the following statements correctly reflects the subsequent developments in the domestic U.S. automobile industry? a. Equilibrium price & quantity will decrease. b. Equilibrium price will increase and the quantity will decrease. c. Equilibrium price will decrease and the quantity will not change. d. Neither Equilibrium price nor quantity will be affected. e. none of the above statements is

Suppose that currently 4 million automobiles are imported into the U.S. and the average price of those automobiles is $25,000. Further suppose that Congress passes legislation approving a 5 million annual quota on imports, which is signed into law by the President. Which of the following statements correctly reflects the subsequent developments in the domestic U.S. automobile industry? a. Equilibrium price & quantity will decrease. b. Equilibrium price will increase and the quantity will decrease. c. Equilibrium price will decrease and the quantity will not change. d. Neither Equilibrium price nor quantity will be affected. e. none of the above statements is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

a) Draw a graph with supply and demand curves that intersect and establish a market equilibrium price of $10 per unit and equilibrium market quantity of 100 units. Be sure to label your graph completely.
Suppose that initially, the gasoline market is in equilibrium. War in the Middle East disrupts imports of oil into the United States shifting the supply curve to S2. The price of gasoline begins to rise, and consumers protest. The government intervenes and sets a price ceiling of $3 per gallon. Use the graph below to answer questions What are the original equilibrium price and quantity? What is the equilibrium price and quantity after the Middle East war begins (S2)? If the price ceiling is imposed, what will occur? A surplus or shortage? Suppose that initially, the gasoline market is in equilibrium. War in the Middle East disrupts imports of oil into the United States shifting the supply curve to S2. The price of gasoline begins to rise, and consumers protest. The government intervenes and sets a price ceiling of $3 per gallon. Use the graph below to answer questions 2a – 2d. How are suppliers affected?
USE TABLE #1: Now, assume the market for electric automobiles is an efficient market. The consumer surplus for the market for electric automobiles is $_____. (Remember to use a comma, if a comma is needed and to include the decimal point and two numbers to the right of the decimal point).
How would each event affect the market for COVID-19 vaccines? Does the event cause a change in demand or a change in the quantity demanded? Is the change positive or negative? Or does the event cause a change in supply or a change in the quantity supplied? Is the change positive or negative? Explain the mechanism for the change and what happens to equilibrium price and quantity. a) The vaccine is approved for children under the age of 12. b) The U.S. government provides a subsidy that allows the price of the vaccine to be $0 for everyone. c) Several vaccines pass Phase 3 (large-scale efficacy tests) and are approved by the FDA for full use. d) A truck carrying the Pfizer vaccine has a malfunction and the refrigeration requirements aren’t met, so all the doses go bad. e) School districts and health care facilities add a requirement for getting the vaccine for all employees.
Milan Italy is trying to control the price of face masks, and it isn't going well. On April 26 2020, Domenico Arcuri, special commissioner for the coronavirus emergency, announced that surgical face masks must be sold at a fixed price of 50 European cents plus tax. A good mask used to cost as little as 10 European cents, but prices surged after Covid-19. The Civil Protection Department, Italy's national body that deals with emergencies, promptly discouraged entrepreneurs from importing masks, right as more masks were needed. No one was allowed to import masks and sell them to the highest bidder. Now, there is a government set price and a shortage of masks and many pharmacists have stopped selling masks. Far from learning its lesson, the Italian government has suggested it will repeat its price-fixing mistakes by setting the price of N95 masks. The results won't be any better.
The Ministry of Misallocation has decreed that the production of widgets must be 7000 each month and the production of gizmos must be 4000 each month. Calculate the deadweight loss in each market caused by these restrictions. Please note the scale of the quantity axis is in thousands. Price of widgets $10 9 8 7 6 5 4 3 2 1 Price of gizmos $100 90 Supply Supply 80 70 60 50 40 30 Demand Demand 20 10 0 012345678910 Quantity of widgets (in thousands) What is the deadweight loss in the widgets market? What is the deadweight loss in the gizmos market? 2 4 6 8 10 12 14 16 18 20 Quantity of gizmos (in thousands)
Assume that the demand and supply functions for each bottle of Beer ABC are. Quantity Demand= 1,000 – 400P Quantity Supply = 100P If a price ceiling is set at $2.50 for each bottle, what will be the impact on the market equilibrium? Any changes in quantity demand or quantity supplied?
Suppose that Jacques and Kyoko are the only consumers of scented candles in a particular market. The following table shows their annual demand schedules: Price (Dollars per candle) 2 4 6 8 10 Jacques's Quantity Demanded Kyoko's Quantity Demanded (Candies) (Candles) 12 28 6 20 4 12 2 6 0 2
Consider a market that can be represented by a linear demand curve, QD = 200 – 2PD, (where QD is the quantity demanded and PD is the price that demanders pay) and a linear supply curve that QS = ½ PS (where QS is the quantity supplied and PS is the price that suppliers get). a. What is the equilibrium price? b. What is the equilibrium quantity? c. What is demand elasticity at the equilibrium point?
Suppose the Canadian demand for and the Japanese supply of cars to Canada is shown in the table below (quantities in thousands). Quantity Supplied (before tariff) Quantity supplied (after tariff) Price ($) 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 Quantity Demanded 170 150 130 110 90 70 50 30 50 70 90 110 130 150 170 190 a) The present equilibrium price is $ and quantity is b) Suppose that the Canadian government imposes a $2,000 per car tariff on imported Japanese cars. Show the new supply in the last column above. thousand. thousand. c) The new equilibrium price is $ and quantity is d) The total revenue received by the government will be $ e) Assume, instead, that the government imposes an import quota of 90,000 cars. The new equilibrium price is $ quantity is thousand. f) Does the government now receive any revenue? No million. and
Consider two types of cars: 1) Performance cars, which emphasize good performance (good mileage, towing capacity, horsepower, etc). 2) Luxury cars, which emphasize good looks Let's say that with the higher gas prices Americans care less about how their cars look and more about how they perform. We'd therefore expect to see in the market for performance cars and in the market for luxury cars. demand fall; demand rise demand rise; quantity demanded fall demand rise; demand fall O demand fall; quantity demanded rise
For each of the following changes in the demand or supply curves in the automobile market below, draw a graph showing the old demand and supply curves as well as the new demand or supply curve (whichever shifts). Also show how the equilibrium price and equilibrium quantity change. Show work on 3 different graphs. With lower trade barriers, foreign automakers export more cars to the U.S. U.S. automobile workers unionize. Due to research and development (R&D), new technologies enable automakers to produce cars much faster.