Principles of Macroeconomics, Loose-Leaf Version
8th Edition
ISBN: 9781337096881
Author: Mankiw, N. Gregory
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 10PA
Subpart (a):
To determine
Subpart (b):
To determine
Equilibrium price and equilibrium quantity with
Subpart (c):
To determine
Equilibrium price and equilibrium quantity with
Subpart (d):
To determine
Equilibrium price and equilibrium quantity with tax.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A market is described by the the supply and demand curves:Qs=2P QD=300-P a.Solve for the equilibrium price and quantity.b.If the government imposes price ceiling of $90,does a shortage or surplus or neither develop?What are the price, quantity supplied,quantity demanded,and size of the shortage or surplus?c.If the government imposes price floor of $90,does a shortage or surplus or neither develop?What are the price, quantity supplied,quantity demanded,and size of the shortage or surplus?d.Instead of a price control,the government levies a tax on producers of $30.As a result, the newpply curve is:Qs(2P-30).Does a shortage or surplus or neither develop?What are the price, quantity supplied,quantity demanded,and size of the shortage or surplus?
Suppose the market demand for organic grass-fed beef is given by Q=100-2P and the supply is given by Q= P/2 (quantity is given in thousand pounds). A) Find the equilibrium price of a pound of beef and the equilibrium quantity.
B) Find the consumer surplus (CS) and producer surplus (PS) at the market equilibrium point.
C) How will the equilibrium change if the government imposes a price ceiling of $20/pound?
D) Show this market with the price ceiling in a supply and demand graph.
E) Consider that the consumers who bought the beef at $20/pound are the ones with the highest willingness to pay (scenario 1), what is the new consumer surplus (CSnew) and the new producer surplus (PSnew)?
F) What is the deadweight loss (DWL) after the price ceiling in scenario 1?
G) What would happen in this market if, instead, the consumers who bought the beef were the ones with the lowest willingness to pay (scenario 2)? (Hint: You don’t have to show it mathematically, or graphically, but write…
Consider a market that is initially in equilibrium and the equilibrium price and quantity are P and Q respectively. Then, the government decides to impose a price ceiling at a price of Pc that is less than P. Which of the following statements is correct?
1. After the price ceiling is imposed, the quantity demanded is less than the quantity supplied on the market.
2. After the price ceiling is imposed, the quantity actually sold in the market is lower than it was before the price ceiling was imposed.
3. Producer surplus in the market increased after the price ceiling was imposed.
4. Since Pc is less than P, the price ceiling is effective and therefore, there is no deadweight loss in the market.
Chapter 6 Solutions
Principles of Macroeconomics, Loose-Leaf Version
Knowledge Booster
Similar questions
- 10. A market is described by the following supply and demand curves: Qs = 2P QD = 300 - P a. Solve for the equilibrium price and quantity. b. If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus? c. If the government imposes a price floor of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus? d. Instead of a price control, the government levies a tax on producers of $30. As a result, the new supply curve is: QS = 2(P-30). Does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity de- manded, and size of the shortage or surplus?arrow_forwardUse the graph below to answer the following questions: Price $15 Supply $14 $13 $12 $11 $10 Demand 25 75 125 175 225 275 Quantityarrow_forward1. The market for pairs of sneakers is described by the following supply and demand curves: Qd = 350-P; Qs = 3P-50. a) Solve for the equilibrium price and quantity. b) If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and the size of the shortage or surplus? c) If the government imposes a price floor of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and the size of the shortage or surplus? d) Instead of a price control, the government levies a tax on produces of $20. As a result, the new supply curve is: Qs = 3(P-0)-50. Does a shortage or surplus (or neither) develop? What is the price the buyer pays, the price the seller receives, quantity supplied, quantity demanded, and the size of the shortage or surplus?arrow_forward
- In Figure 1, suppose the marginal value for gasoline falls by $6 for every quantity demanded for all gas stations in the market. After the changes, assume that the government enacts a price ceiling of $2. What will happen in the market? A) Quantity supplied will equal quantity demanded.B) There will be a surplus of 1 gallon.C) There will be a shortage of 3 gallons.D) There will be a surplus of 2 gallons.E) There will be a shortage of 4 gallons.arrow_forwardA). Draw the supply and demand curves for the market of specific good. B). Suppose that the equilibrium price for this product is $4 and the equilibrium quantity is 100 units. If the government imposes a price ceiling of $3 what happens? Draw the new graph explaining how quantities are affected by that decision. C). Suppose that the equilibrium price for this product is $4 and the equilibrium quantity is 100 units. If the government imposes a price floor of $5 what happens? Draw the new graph explaining how quantities are affected by that decision.arrow_forwarda. If a producer tries to sell oranges at a price of $0.50 per pound, what will be the quantity demanded and quantity supplied at this price? b. Determine whether there is a surplus or a shortage at a price of $0.50 per pound, and determine the size of the surplus or shortage. At this price, there will be aarrow_forward
- Suppose demand and supply are given by Qd = 60 - P and QS = P - 20. a. What are the equilibrium quantity and price in this market? Equilibrium quantity: 20 Equilibrium price: $ 40 b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market. Quantity demanded: Quantity supplied: 32 Surplus: 24 c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $32 is imposed in the market. Also, determine the full economic price paid by consumers. Quantity demanded: 25 x Quantity supplied: 15 Shortage: 10 x 8 x Full economic price: $ 45 xarrow_forwardSuppose demand and supply are given by Qd = 60 - P and Qs = P - 20.a. What are the equilibrium quantity and price in this market?Equilibrium quantity: Equilibrium price: $b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market.Quantity demanded: Quantity supplied: Surplus: c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $32 is imposed in the market. Also, determine the full economic price paid by consumers.Quantity demanded: Quantity supplied: Shortage: Full economic price: $arrow_forwardConsider the market for some product X that is represented in the accompanying demand-and-supply diagram. a. Calculate the total economic surplus in this market at the free-market equilibrium price and quantity. The total economic surplus is $280 per day. (Round your response to the nearest cent as needed.) b. Calculate the total economic surplus in this market when a price ceiling at $21 is in effect. The total economic surplus is $ per day. (Round your response to the nearest cent as needed.) c. After imposition of the price ceiling at $21, how many units of this good are no longer being produced and consumed per day compared to the free-market equilibrium? unit(s) of this good are no longer being produced and consumed per day compared to the free-market equilibrium. (Round your response to the nearest whole number as needed.) d. Calculate the deadweight loss that results from the imposition of the price ceiling at $21. per day. The deadweight loss that results from the imposition of…arrow_forward
- The demand for ice cream is given by QD = 200 – 20P and the supply of ice cream is given by QS = - 100 + 40P. The quantity is measure in gallons of ice cream. - Calculate the consumer surplus, producer surplus, and total surplus at the market equilibrium. Now assume that the government decides to set the price of ice cream at $ 7.00 per gallon. Would this create a surplus or a shortage in the ice cream market? Calculate the surplus (or shortage). Calculate the consumer surplus, producer surplus, and total surplus at the new $ 7.00 price. What happened to each after the intervention of the government in the ice cream market? Calculate the deadweight loss after the imposition of the $ 7.00 price. Compare this to the deadweight loss associated with the market equilibrium. In your own words, explain why this deadweight loss is a measure of the inefficiency in the market created by the government intervention.arrow_forward1) Market for Flat-Screen TVs: Demand: Qd = 2,600-5P Supply: Qs = 1000 + 10P What would be the amount of shortage if a price celling is imposed at price of $170? 2) Suppose in the market for banana. When the price is $5, the quantity demanded for banana is 6, and the quantity supplied is 10. what's the amount of surplus in the market?arrow_forwardHello, please answer the attached question BR,arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning