MICROECONOMICS-ACCESS CARD <CUSTOM>
MICROECONOMICS-ACCESS CARD <CUSTOM>
11th Edition
ISBN: 9781266285097
Author: Colander
Publisher: MCG CUSTOM
Question
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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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The government decides to place a £25 per unit-subsidy on the sales of books. The initial demand and supply curves for books in this country are respectively: Qd = 1000 – 2*P and Qs = 3*P + 500 where price in measured in Great British Pounds per book. a) What is the pre-subsidy equilibrium price and equilibrium quantity of books? Illustrate demand and supply curves and the market equilibrium in a diagram indicating the respective intercepts. What are Consumer and Producer Surplus in this market? b) How many books will be traded once the £25 subsidy is enacted? How much will consumers pay per book? Illustrate the effects of the subsidy on the equilibrium quantity and price of books in a diagram (you can use the diagram drawn in part a)). What are Consumer and Producer Surplus in this market with the subsidy in place c) What is the change in consumer and producer surplus following the introduction of this subsidy? Calculate the monetary value of these changes and identify the respective…
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.
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