Suppose that in the rental market for apartment units the monthly demand by low-income (poor) consumers is given by P=1000-2Q, where Q is the number of units. The marginal private cost of maintaining the units by the landlords is a constant $500 per unit per month. Suppose that low- income consumers are eligible for subsidized rent. Landlords renting units to low-income consumers receive a subsidy from the government of $250 per unit per month to cover the difference between the normal market rent on the units and the subsidized rent paid by the eligible poor. Using a graph with dollars on the vertical axis and Q on the horizontal axis, answer the following questions: 42. What is the deadweight loss of the subsidy at the market equilibrium? $ Now suppose the demand for housing by the poor generates external benefits to the non-poor in society. Suppose the marginal external benefit curve is given by MEB-250. 43. With the subsidy of $250 in the presence of the external benefit, the deadweight loss in the market will be $ 44. The subsidy will cost the government a total of $

Suppose that in the rental market for apartment units the monthly demand by low-income (poor) consumers is given by P=1000-2Q, where Q is the number of units. The marginal private cost of maintaining the units by the landlords is a constant $500 per unit per month. Suppose that low- income consumers are eligible for subsidized rent. Landlords renting units to low-income consumers receive a subsidy from the government of $250 per unit per month to cover the difference between the normal market rent on the units and the subsidized rent paid by the eligible poor. Using a graph with dollars on the vertical axis and Q on the horizontal axis, answer the following questions: 42. What is the deadweight loss of the subsidy at the market equilibrium? $ Now suppose the demand for housing by the poor generates external benefits to the non-poor in society. Suppose the marginal external benefit curve is given by MEB-250. 43. With the subsidy of $250 in the presence of the external benefit, the deadweight loss in the market will be $ 44. The subsidy will cost the government a total of $

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

List the most common nonprice rationing systems in the market
Suppose a new social service is introduced by a government at a fixed cost of $3,000 (note: there is no marginal cost to provide this service). This service has not been provided before and there is no available substitute for this service. Economists have estimated the marginal benefit of the new service is given by: MB = 100 – Q where Q is the quantity (in hours) of the service that is used. Please note the MB gives both the marginal private benefit (MPB) and marginal social benefit (MSB) (i.e., MB = MPB = MSB). The government imposes a price to ration use of the service to recover part of its costs. What price should be introduced to ration the use of the service to 50 hours? What is the net social benefit when the service charge is used? How does charging a price compare to providing it for free and/or rationing? Be Hint(s): similarly, think about measuring the area of consumer surplus and compare it to the governments cost. You may want to complete Q5 as you complete this…
Jonathan, Scott and Mitchell share a garage. All enjoy having the garage cleaned, regardless of who pays for cleaning. The graph below represents Jonathan, Scott and Mitchell’s individual demand for garage cleaning. The marginal cost of cleaning $3 per hour. The Lindahl prices for Jonathan, Scott and Mitchell are, respectively, $68/17, $17/17, and $4/85 per hour. $34/17, $17/17, and $0 per hour. None of these. $30/17, $15/17, $6/17 per hour. $0, $0, and $0 per hour.
Refer to the diagrams below in which figures (a) and (b) show demand curves reflecting the prices Alvin and Elmer are willing to pay for a public good, rather than do without it. If the marginal cost of the optimal quantity of this public good is $6, the optimal quantity must be: $12 10 Alvin (a) 4. 2. 4. $12 10 Elmer 6. 4. (b) 2.
5. Consider a monocentric model with fixed housing unit h and the utility of residents u=c, where c is the consumption of the composite goods. The budget constraint of each resident living at distance d from the CBD is c + ph = w-dt, where w is wage, p is housing rental rate, t is the unit commuting cost in distance. The city is open and free migration in and out. The external utility they obtain out of the city is ū= 10. The rental rate on agricultural land is pA. (a) Illustrate why the consumption of residents living in all parts of the city will be equalized. (b) Derive the housing rental rate (p) as a function of d, distance from the CBD, What is the slope? Draw a figure with p at the y-axis and d at the x axis. (c) Discuss how the boundary of the city is determined in this model, how would the boundary of the city respond to wage w and commuting cost t?
The market for smart phone applications is characterized by the following demand and supply curves. QD = D(P) = 15 - 3P QS = S(P) = 5 + 10P (a) Calculate the equilibrium price and quantity for this market. (b) The government is considering introducing a per unit subsidy of t on each electric car that is purchased. Suppose that the statutory incidence of this subsidy will be on buyers. Using the equilibrium conditions, D(Pn - t) = S(Pn) = Q* (i.e. that demand equals supply in equilibrium), derive an equation in terms of es and ed that describes what fraction of the subsidy is borne by buyers/consumers. (c) Suppose that the unit tax is set at t = 0.1 per unit. What is the excess burden of this tax per dollar of revenue raised? (d) Suppose that we incorrectly assumed that supply was perfectly elastic and there was no impact of the tax on the equilibrium price received by sellers. Would EB/Tax Revenue be higher or lower than what you calculated in part (c)? In 4 sentences, explain your…
For years the government has subsidized higher education through grants; consider the demand and supply for college credit hours at a local private liberal arts collegeQD = 6,000 – 300PQS = 700P – 500 where P is the price, in hundreds of dollars, and Q is the number of credit hours per semester. Suppose the government subsidizes credit hours at a rate of $120 per hour. Calculate changes in consumer surplus. What is the size of the deadweight loss?
Question is in attached image. Thank you!
Suppose demand and supply for services of surgeons in Australia each day are given below, where demand and supply are expressed in terms of number of services per day, and P = price per service Qd=2000−2P Qs=3P What area(s) comprise the consumer surplus after the implementation of the production quota? (select all relevant areas) a) A b) B c) C d) E e) D f) F
Consider a situation where Ron (R) and Nancy (N) have demands for a private good that can be represented by the following functions: D_R: Q_R = 18 - 3P_R D_N: Q_N = 11 - 2P_N If Ron and Nancy are the only two consumers of this private good and the supply function for the good is: S: Q = -1 + P What is the aggregate quantity of the good they buy?
Given a demand curve of P=214-7Qd and supply of P=438Qs, find the total cost to society of a lump sum tax of 17 dollars, assuming the government is as efficient in resouce use as households.