Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive. The demandcurve can be expressed as P = 60 - Qd; the supply curve can be expressed as P = 0.5Qs. Quantity isexpressed in millions of boxes per month. Now suppose that the federal government imposes a productionquota on cigarettes of 30 million boxes per month. What is the change in producer surplus (per millionboxes) associated with the quota?$175$75$25$50

To calculate the change in producer surplus due to the imposition of a production quota, we first…

Answered: Suppose that the market for cigarettes…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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?
The market for Mandrake root in Sodden is perfectly competitive. Market demand is given by Q=294-3P and market supply is given by Q=5P . The government is concerned about high prices and imposes a price ceiling of $19. What is the quantity traded in the market with this price ceiling?
Suppose the market for pizzas in the U.S. is perfectly competitive and is characterized by the following demand and supply equations (Q = quantity and P = Price): Demand for pizza: Qd = 100 – P Supply of pizza: Qs = 2P − 50 A) Find the market clearing equilibrium price P* and quantity Q*. B) Find the the consumer surplus and producer surplus at the equilibrium. C) Suppose that the U.S. imposes a price ceiling at $40. What is the quantity demanded by consumer (Qd’)? What is the quantity supplied by suppliers (Qs’)? D) Suppose that the U.S. imposes a price ceiling of $40. Is there a shortage or surplus for pizzas? E) Suppose that the U.S. imposes a price ceiling of $40. What is the new CS’ and PS’? Assuming that the government purchases/provides the surplus/shortage. Under the same assumption, what is the deadweight loss caused by the price floor?
The table below shows the demand and supply schedule for gasoline in a hypothetical country called Microland Price per litre ($) Quantity Demanded in 000 Quantity Supplied in 000 litres (per Month) litres (per month) 11 0 27 10 2 25 9 4 23 8 6 20 7 8 17 6 10 15 5 12 12 4 14 10 3 16 7 2 18 5 1 3 3 Explain the effect of the subsidy on the market forces and the equilibrium point
d) What will be the deadweight loss? e) What will be the firm’s maximum profits? f) How much would the firm would save in additional costs, if it had decided to supply all of that output at the point of equilibrium?
Demand for apartments in town is D (x) =860 – 3x, and the supply is S (x) =500+9x, %3D where x is the number of apartments, in hundreds, and D (x) and S(x) are the rent in dollars per month, per apartment. The equilibrium point is (30, 770). Suppose a maximum rent of $644 per month is imposed by the town council. Find the deadweight loss. $ 1176 $ 1152 $ 16 $ 3072
only typed answer Is this right?
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
The market demand function for corn is Q = 30 - 2P. The market supply function is QS = 5P-2.5, both measured in billions of bushels per year. Suppose the government imposes a $8.10 tax per bushel. What will be the effects on aggregate surplus, consumer surplus, and producer surplus? What will be the deadweight loss created by the tax? Instructions: Round your quantities to the nearest whole number. Round prices, surpluses and deadweight losses to 2 decimal places. a. What are the initial equilibrium effects? Complete the table below. Initial equilibrium price Initial equilibrium quantity Initial equilibrium consumer surplus Initial equilibrium producer surplus After-tax equilibrium price After-tax equilibrium quantity After-tax equilibrium consumer surplus After-tax equilibrium producer surplus $ Government revenue After-tax equilibrium aggregate surplus Deadweight loss Before the tax Initial equilibrium aggregate surplus b. What are the effects after the government imposes a $8.10 tax…
Graphically, producer surplus is the area from the market price ($120) down to the supply curve and over to the equilibrium quantity of 120.
In a perfectly competitive market for cheese with downward sloping demand and upward sloping supply, the equilibrium price is $12 per kilo. If the government imposes a price ceiling of $10, we can conclude that the government policy will: Select one: a. reduce the number of units sold only if demand is elastic b. decrease producer surplus and decrease total surplus c. reduce the number of units sold only if demand is inelastic d. decrease producer surplus but increase total surplus e. increase producer surplus but decrease total surplus
Subsidies lead to overproduction and overconsumption relative to the competitive equilibrium. What is the deadweight loss associated with this? Why is there a deadweight loss? Depict this in your original figure (see attached), or draw a new figure.

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