MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Question
Chapter 7, Problem 16QE
(a)
To determine
Determine how a
(b)
To determine
Determine how a price floor is like a tax on the consumer and a subsidy to suppliers and who get the revenue in the case of price floor.
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Students have asked these similar questions
Which of the following explains why is there is a deadweight loss associated with market that is not at equilibrium?
A. When a price ceiling is in effect, producers refuse to sell goods at the lower price
B. When a price floor is in effect, consumers refuse to sell the good at the lower price.
C. When a price ceiling is in effect, consumers refuse to buy the good at the higher price.
D. When a price ceiling is in effect, producers refuse to sell the good at the higher price.
E. When a price floor is in effect, producers refuse to sell the good at the higher price.
F. When a price floor is in effect, producers refuse to sell the good at the lower price.
Demonstrate how a price floor is like a tax on consumers and a subsidy to suppliers.
Instructions: On the following graph, use the tool 'Taxc' to show the area of the tax paid by consumers. Then use the tool 'DWL' to
show the deadweight loss caused by this tax.
Market with a Tax
Price
12-
10-
Tax
2.
8
Quantity
D
Tax
DW
Please answer a and b and explain the answers:
Chapter 7 Solutions
MICROECONOMICS
Ch. 7.1 - Prob. 1QCh. 7.1 - Prob. 2QCh. 7.1 - Prob. 3QCh. 7.1 - Prob. 4QCh. 7.1 - Prob. 5QCh. 7.1 - Prob. 6QCh. 7.1 - Prob. 7QCh. 7.1 - Prob. 8QCh. 7.1 - Prob. 9QCh. 7.1 - Prob. 10Q
Ch. 7 - Prob. 1QECh. 7 - Prob. 2QECh. 7 - How is elasticity related to the revenue from a...Ch. 7 - Prob. 4QECh. 7 - Prob. 5QECh. 7 - Prob. 6QECh. 7 - Prob. 7QECh. 7 - Prob. 8QECh. 7 - Prob. 9QECh. 7 - Prob. 10QECh. 7 - Prob. 11QECh. 7 - Prob. 12QECh. 7 - Prob. 13QECh. 7 - Prob. 14QECh. 7 - Prob. 15QECh. 7 - Prob. 16QECh. 7 - Prob. 17QECh. 7 - Prob. 18QECh. 7 - Prob. 19QECh. 7 - Prob. 20QECh. 7 - Prob. 21QECh. 7 - Prob. 22QECh. 7 - Prob. 1QAPCh. 7 - Prob. 2QAPCh. 7 - Prob. 3QAPCh. 7 - Prob. 4QAPCh. 7 - Prob. 5QAPCh. 7 - Prob. 1IPCh. 7 - Prob. 2IPCh. 7 - Prob. 3IPCh. 7 - Prob. 4IPCh. 7 - Prob. 5IPCh. 7 - Prob. 6IP
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- In a market where the supply curve is perfectly inelastic how does an excise tax affect the price paid by consumers and the quantity bought and sold?arrow_forwardHand written solutions are strictly prohibited.arrow_forwardAccording to Graph 8-1, after the tax is levied, producer surplus is represented by area:arrow_forward
- Dear expert hand written not allowed pleasearrow_forwarddo fast.arrow_forwardIn the market for Widgets, the equilibrium price is $ 20 and the equilibrium quantity is 5000 Widgets, which of the following statements is FALSE? A. None of the above B. If the government sets a price ceiling at $ 15 companies will increase the quantity supplied C. If the government sets the price floor for widgets at $ 25 there will be a surplus of widgets in the market D. If the price ceiling is set at $ 15 there will be a shortage of Widgets in the marketarrow_forward
- Consider the market for paper towels where the supply curve is upward sloping and the demand curve is downward sloping. a. Suppose there is an effective price ceiling applied on this market. What happens to the consumer surplus as a result? b. Suppose there is an effective price floor applied on this market. What happens to the consumer surplus as a result?arrow_forwardAnswer clearly n quicklyarrow_forwardMacmillan Learning Suppose the government decides to impose a binding price ceiling on the market. a. Place the price ceiling line segment to illustrate this new government policy. b.Shade the area representing the deadweight loss (DWL) that arises due to the price ceiling. Price Quantity Supply Demand DWL Price ceilingarrow_forward
- O Macmillan Learning Price Controls and Quotas - End of Chapter Problem The Venezuelan government has imposed a price ceiling on the retail price of roasted coffee beans. The accompanying diagram shows the market for coffee beans. In the absence of price controls, the equilibrium is at point E, with an equilibrium price of PE and an equilibrium quantity bought and sold of QE. Show the consumer and producer surplus before the introduction of the price ceiling. Price of Coffee Beans E Quantity of Coffee Beans Supply Demand CS PSarrow_forwardConsider the attached graph showing the supply and demand for rental apartments around the UH. campus. If the government were to subsidize housing by $1000 per unit per month, then the quantity of rental apartments would____ (increase or decrease) by____ thousand units. The rental price received by landlords inclusive of the subsidy would ____(increase or decrease) by_____ dollars per month while the price paid by tenants, net of the subsidy, would____ (increase or decrease) by____ dollars per montharrow_forwardfind tbe consumer surplus, producer surplus, and deadweight loss in the following market under these scenariosarrow_forward
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