Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
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Chapter 7, Problem 20QE
To determine
Rent-seeking.
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In an unregulated, competitive market we could calculate consumer surplus if we knew the equations representing supply and demand. For this problem assume that supply and demand are as follows:
Supply P = 4 + 0.116Q
Demand P = 25 - 0.10Q
where P represents unit price in dollars and Q represents the number of units sold each year.
Calculate the annual value of aggregate consumer surplus.
Market for TVs are perfectly competitive. Assume TV supply is point elastic and upward sloping
Government imposes consumer tax upon TVs.
If point elasticity of demand is inelastic, is deadweight loss generated by the tax higher or lower relative to where the point elasticity of demand is elastic.
Housing shortages caused by rent controls are larger in the long run because the supply of housing is more elastic in the
long run.
True
O False
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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- Consider the market for BP gasoline. If the market has a very elastic supply and a very inelastic demand, how would the burden of a tax on BP gasoline be shared between producers and consumers? Draw a graph to support your answer.arrow_forward"New York City has a long-standing policy of control-ling rents in certain parts of the city—in essence, a price ceiling on rent. Is the market for apartments likely to be efficient or inefficient? What does this imply for the size of total surplus?"arrow_forwardThe market for soft drinks is perfectly competitive. Assume that the supply of soft drinks is point elastic and upward sloping. The government imposes a consumer tax on soft drinks. If point elasticity of demand is inelastic, is the deadweight loss generated by the tax higher or lower relative to where the point elasticity of demand is elastic? Explain why.arrow_forward
- Please Provide correct answers.arrow_forwardThe shortages created by rent controls is largest when demand by tenants is ........and supply by landlords is......... more elastic; less elastic more elastic; more elastic Ⓒunitary elastic; unitary elastic less elastic: less elastic less elastic; more elasticarrow_forwardThe demand for mineral water is P=10 – (2/3) Q and supply function for mineral water isP=1+(1/3)Q What is the burden of the tax on producers and consumers and explain how the tax burden isrelated to elasticities? thanks in advance!arrow_forward
- On a diagram, draw two linear demand functions, viz. one with greater own price elasticity of demand and another with relatively lower own-price elasticity of demand. The supply function is also linear and is the same in both scenarios. Assume that the same rate of quantity tax is imposed in both cases. Which demand function exhibits a greater 'DEADWEIGHT LOSS' ? Why is this happening ?arrow_forward2. Consider a market where demand is described by QD = 140 – 6P. An individual firm in this market can supply quantity qs = P – 2 in the short run, for any price above 2. (Quantities are in thousands of units per year, prices are in US dollars per unit.)arrow_forwardDemand is D = 40 - p and supply S = p. Calculate Consumer Surplus when a Price Ceiling is introduced at p = 10. Provide a Supply and Demand Diagram to illustrate this calculation. Illustrate the Efficiency Loss. Explain how the size of the Efficiency Loss will depend on the price elasticity of supply.arrow_forward
- the cities of Woburn and Peabody are five miles apart. Woburn enacts a rent control law that puts a ceiling on rents well below their competitive market value. Predict the impact of this law on the competitive equilibrium rent in Peabody, which doesn't have a rent control law. Illustrate your answer with a demand and supply grapharrow_forwardThe demand and supply curves for a price taking firm are as follows: Qd = 10- 0.5 Pd Qs= -2+Ps, when Ps>=2 Qs= 0, when Ps<2 where Qd is the quantity demanded when the price consumers pay is Pd, and Qs is the quantity supplied when the price producers receive is Ps. Answer the questions below: Explain in detail (using demand and supply curves), when a tax is imposed, who would burden the tax?arrow_forwardIf rent controls are so counterproductive, why do cities impose them? How else might the housing problems of poor people be solved?arrow_forward
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