EBK MACROECONOMICS
10th Edition
ISBN: 9781259662447
Author: Colander
Publisher: YUZU
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Question
Chapter 5, Problem 9IP
(a)
To determine
Impact of removing the subsidy and designation.
(b)
To determine
The reason for the existence of the program for a longer period.
(c)
To determine
Tax for higher price of wool law.
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Students have asked these similar questions
Consider the following supply and demand curves:
Demand: Price = 50-3.5*Qd
Supply Price = 20+.5*Qs
Suppose now a 20 dollar subsidy was placed on consumers. Given this information, find the dead weight loss created by the subsidy
Based on the diagram below, if a $60 per-unit subsidy were implemented in this market, what would the effective price received by producers become? Enter your answer in whole dollars.
Suppose that the demand for sugar is given by P=27-20d and the supply is given by
P=2+3Qs. The government decided to give a subsidy of $5 per unit to suppliers. This
decision of the government will lead to a price received by suppliers to
Chapter 5 Solutions
EBK MACROECONOMICS
Ch. 5.1 - Prob. 1QCh. 5.1 - Prob. 2QCh. 5.1 - Prob. 3QCh. 5.1 - Prob. 4QCh. 5.1 - Prob. 5QCh. 5.1 - Prob. 6QCh. 5.1 - Prob. 7QCh. 5.1 - Prob. 8QCh. 5.1 - Prob. 9QCh. 5.1 - Prob. 10Q
Ch. 5.A - Prob. 1QECh. 5.A - Prob. 2QECh. 5.A - Prob. 3QECh. 5.A - Prob. 4QECh. 5.A - Prob. 5QECh. 5.A - Prob. 6QECh. 5.A - Prob. 7QECh. 5.A - Prob. 8QECh. 5.A - Prob. 9QECh. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - Prob. 3QECh. 5 - Prob. 4QECh. 5 - Prob. 5QECh. 5 - Prob. 6QECh. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QECh. 5 - Prob. 11QECh. 5 - Prob. 12QECh. 5 - Prob. 13QECh. 5 - Prob. 14QECh. 5 - Prob. 15QECh. 5 - Prob. 16QECh. 5 - Prob. 17QECh. 5 - Prob. 1QAPCh. 5 - Prob. 2QAPCh. 5 - Prob. 3QAPCh. 5 - Prob. 4QAPCh. 5 - Prob. 5QAPCh. 5 - Prob. 1IPCh. 5 - Prob. 2IPCh. 5 - Prob. 3IPCh. 5 - Prob. 4IPCh. 5 - Prob. 5IPCh. 5 - Prob. 6IPCh. 5 - Prob. 7IPCh. 5 - Prob. 8IPCh. 5 - Prob. 9IPCh. 5 - Prob. 10IPCh. 5 - Prob. 11IPCh. 5 - Prob. 12IPCh. 5 - Prob. 13IPCh. 5 - Prob. 14IP
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- a. Does the market provide an efficient amount of effort? b. The teacher of the course is considering to implement a tax-cum-subsidy policy in order to enhance effort in the course. Suppose he seeks advice from you. He proposes to subsidize effort at the rates, meaning that putting G, units of time into working on the problem sets will feel less, concretely, only like putting (1-s)G, units of time. In order to subsidize effort, he will tax students' time at the rate t, so the total available time will become(1-1)W₁. What tax-subsidy combination would you propose in order to implement the social optimum while keeping budget balance?arrow_forwardRead the following scenario. Corn is a very valuable product for which the U.S. government routinely offers subsidies. With no price support, the equilibrium price for corn is $300 per ton and the equilibrium quantity is 500 million tons per year. Suppose that the government agrees to pay farmers $350 for every ton of corn they produce and can't sell in the market. According to the farmer's market supply curve, 600 million tons per year is supplied at the price of $350 a ton, so production should increase to this amount. However, domestic users of corn cut back their purchases. Only 450 million tons a year is demanded at the price of $350 a ton, and purchases decrease to this amount. Farmers continue to produce 500 million tons of corn per year, so because they produce a greater quantity of corn than domestic buyers are willing to purchase, something must be done with the surplus. To make the price support work, the government decides to buy the surplus. Step 2 Use the scenario to…arrow_forwardConsider the following supply and demand curves: Demand: Price = 50-3.5*Qd Supply: Price = 20+.5*Qs Suppose now a 20 dollar subsidy was placed on consumers. Given this information find the resulting subsidy bill.arrow_forward
- The market supply and demand for solar panels are given respectively by QS = 80P – 5,000 and QD = 65,000 – 20P, where P is price per solar panel and Q measures the quantity of solar panels. Suppose the government provides a £100 subsidy per solar panel. A. Calculate the price and equilibrium quantity before the government subsidy. B. Calculate the post-subsidy equilibrium quantity, the prices consumers pay and the price producers receive C. How much does the subsidy program cost the government? (3%)arrow_forwardExample 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.…arrow_forwardplease plot a graph showing the effect of a government subsidy on the market for surgical masks.arrow_forward
- Use two market diagrams to explain how an increase in state subsidies to public colleges might affect tuition and enrollments in both public and private colleges.arrow_forwardThe local government has decided that because children's health has large external benefits, it will offer a subsidy to help families pay for visits to the pediatrician. However, the government isn't sure at what level to set the subsidy. The figure below shows the current demand curve for pediatricians' visits (D₁), and three alternative subsidies, represented by curves D2, D3. and D4- Price (S) 240 220- 200- 180- 160- 140- 120- 80- 60- 40- 20- 0 Quantity of pediatrician visits D₂ reset D₂ D₂ 50 100 150 200 250 300 350 400 450 500 D₁ D₂ a. Assume that the correct level of subsidy is D3. Compared to the efficient outcome, graph the loss in total surplus that would result from subsidies D₂ and D4 Instructions: Use the tools provided (D₂ and D4) to draw the loss in total surplus for each subsidy. b. The socially optimal level of pediatrician visits is 350 visits.arrow_forwardSuppose that the demand curve for wheat is and the supply curve is The government provides producers with a specific subsidy of s = $2 per unit. How do the equilibrium price and quantity change? The equilibrium price by $ and the equilibrium quantity by $ Q = 400 - 40p Qs = 40p. units. (Enter numeric responses using real numbers rounded to two decimal places.)arrow_forward
- why does a subsidy on a good lower the price consumers pay and raises the price producers recieve?arrow_forwardthanksarrow_forwardThe market for used economics textbooks is perfectly competitive, with a market supply curve given by P = 6 + 2Q and market demand curve given by P = 42 – Q, leading to an equilibrium of P = 30 and Q = 12. If the government provides a subsidy of $12 per textbook, what will be the new market quantity? Determine the new CS and PS, the cost of the subsidy, and the amount of deadweight loss created by the policy.arrow_forward
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