MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 7.1, Problem 6Q
To determine
Demonstrate the effect of an effective
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Calculate producer surplus when a production quota at q = 10 is introduced in a market with demand d = 110 – p and supply s = p – 50
If a price ceiling is non-binding, the market
price will be the equilibrium price.
True
False
If a price ceiling is binding in a given market, the effect on supplier profits through quantity is:
no effect
decreased
increased
indeterminate
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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- A price ceiling on oil below the market equilibrium price would be expected to have all the following effects except: Discouraging the exploration for domestic supplies of oil Creating a shortage of oil Giving consumers more oil to consume at lower prices Increasing the production of alternatives to oil such as natural gasarrow_forwardConsider the following market demand and supply: Demand: P = 16 - 4Qd Supply: P = 6+ 3Qs If the market is at equilibrium, what is the producer surplus? Note: Express your answer in units of dollars, to at least two digits after the decimal. 3.06arrow_forwardConsider 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 subsidyarrow_forward
- The market for N-95 masks is perfectly competitive. Market Demand is given by Q=434-2P and Market Supply is given by Q=2P. The government imposes a price ceiling of $52. What is the maximum Consumer Surplus in the market with the price ceiling?arrow_forwardSuppose that at equilibrium, the price elasticity of demand for wheat is -1.5 and the price elasticity of supply is 0.5. If the government imposes a price ceiling that is 12% below the equilibrium price, this price constraint will lead to: A) A shortage equal to 24% of the equilibrium quantity B) A surplus equal to 24% of the equilibrium quantity C) A shortage equal to 2.4% of the equilibrium quantity D) A surplus equal to 2.4% of the equilibrium quantityarrow_forwardConsider a market with a perfectly elastic demand curve at p∗ = 1, 763 and a perfectly inelastic supply curve at q∗ = 452. What is the Consumer Surplus? What is the Producer Surplus?arrow_forward
- The inverse supply function for gum is PS = 4 + QS. The inverse demand function for gum is PD = 16 - QD. By how much does producer surplus decrease when a $2 tax on production is implemented? (Please round your answer to 1 decimal place, e.g., 1.2, -3.4).arrow_forwardIn a perfectly competitive market for cheese with downward sloping demand and upward sloping supply, the equilibrium price is $12 per kilo. If the government imposes a price ceiling of $10, we can conclude that the government policy will: Select one: a. reduce the number of units sold only if demand is elastic b. decrease producer surplus and decrease total surplus c. reduce the number of units sold only if demand is inelastic d. decrease producer surplus but increase total surplus e. increase producer surplus but decrease total surplusarrow_forwardGiven the following information QD = 240 - 5P QS = p where QD is the quantity demand, QS is the quantity supplied and P is the price. Suppose that the government decides to impose a tax $12 per unit on sellers in this market. Determine: f) Producer surplus after tax g) Tax revenue h) Deadweight loss of the tax i) Total surplus after taxarrow_forward
- Suppose the following demand and supply function:Qd = 750 – 25PQs = -300 + 20 Pi.Find equilibrium price and quantityii.Find consumer and producer surplusarrow_forwardStarting from an initial equilibrium price, a surplus at that price can be created either by an increase in supply or a decrease in demand. TRUE FALSEarrow_forwardA binding price ceiling is imposed in the market for aspirin. At the ceiling price: a) the quantity supplied of aspirin exceeds the quantity demanded. b) the quantity demanded of aspirin equals the quantity supplied. c) the quantity demanded of aspirin exceeds the quantity supplied. d) the quantity demanded of aspirin will be artificially restricted by the price ceiling.arrow_forward
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