Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 2, Problem 13RQ
To determine
The effect of the price of natural gas.
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What is wrong with the following statement?
The market supply for natural gas is the sum of all prices that natural gas producers are willing and able to sell at for every quantity.
Is demand for gas to be relatively elastic or inelastic?
Example 2: In fall of 2011, the National Christmas Tree Association decided to impose a fee/tax of
$0.15 per tree sold.² They claimed the tax revenue raised would fund a new marketing campaign for
Christmas tree growers in response to growing plastic tree imports. The proposal quickly drew
controversy: some argued that the fee/tax would be passed along in higher prices to consumers, but the
National Christmas Tree Association says no. How does the answer to this question depend on the
assumption about the price elasticity of demand?
a. Consider two graphs of the market for Christmas trees. The supply curve in each market is assumed
to be the same. In the left graph, assume the price elasticity of demand is relatively inelastic and in
the right graph, assume the price elasticity of demand is relatively elastic. Add labels on your
diagram to identify the equilibrium price and quantity of trees before the tax.
b. Now, suppose retailers are assessed a tax of amount for each tree sold.…
Chapter 2 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - If a 3-percent increase in the price of corn...Ch. 2 - Prob. 4RQCh. 2 - Explain why for many goods, the long-run price...Ch. 2 - Why do long-run elasticities of demand differ from...Ch. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - In a discussion of tuition rates, a university...
Ch. 2 - Suppose the demand curve for a product is given by...Ch. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - Prob. 1ECh. 2 - Consider a competitive market for which the...Ch. 2 - Prob. 3ECh. 2 - Prob. 4ECh. 2 - Prob. 5ECh. 2 - Prob. 6ECh. 2 - In 2010, Americans smoked 315 billion cigarettes,...Ch. 2 - In Example 2.8 we examined the effect of a...Ch. 2 - In Example 2.8 (page 52), we discussed the recent...Ch. 2 - Prob. 12E
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