Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 7, Problem 11P
To determine
(a)
The area of
To determine
(b)
The area of consumer surplus and producer surplus if the
To determine
(c)
The deadweight cost of the tax.
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If a municipality sets a price ceiling below equilibrium for apartments in New York City,
Select one:
a. the price ceiling will create a surplus of apartments
b. the price ceiling will create a shortage of apartments
c. the price ceiling will not affect the market for apartments
d. the market for more broadway plays will increase
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A). 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.
(a) In each of the following examples explain the effects of the changes on equilibrium price, equilibrium quantity, demand and supply |
(i) Average incomes increase
(ii) The cost of raw materials falls
(iii) The population decreases
(b) Using diagrams to help with your answer show the difference between a price floor imposed by the government on a good and a production subsidy. How does this affect the price of the product and the quantity in each case?
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