EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Chapter 8, Problem 2QCMC
To determine
The change in
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Sofia pays Sam $50 to mow her lawn every week. When the government levies a mowing tax of $10 on Sam, he raises his price to $60. Sofia continues to hire him at the higher price. What is the change in producer surplus, change in consumer surplus, and deadweight loss?a. $0, $0, $10b. $0, −$10, $0c. +$10, −$10, $10d. +$10, −$10, $0
Demand
A. $100 thousand
B. $200 thousand
OC. $600 thousand
D. $800 thousand
Supply
1
P= 50+
P=80-QD
QD=80-P QS=2P-100
The equations above describe the demand and supply for Chef Emnie's Sushi-on-a-Stick. The
equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units. What is the
value of producer surplus?
Consider the supply and demand curves for
taxi rides in the attached graph. At at price of
$1.30 taxi companies earn a producer surplus
of_____million dollars.
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- part C D Earrow_forwardGavin has been working full-time as a gardener for$300 a week. When the market price of gardenersrises to $400, Hector becomes a gardener as well.How much does producer surplus rise as a result ofthis price increase?a. by less than $100b. between $100 and $200c. between $200 and $300d. by more than $300arrow_forwardwhat is the deadweight loss due to a $2 tax? a) 200 b) none 50 100 e) 150 7- Domestic supply 6- Domestic Demand 500 Quantity 5. 4- 2- 1. 100 200 300 400arrow_forward
- Only typed Answerarrow_forwardRyan would be willing to pay $1 for a lollipop. Sarah would be willing to pay $0.50. The price of the lollipop is $0.75. What is Ryan and Sarah's combined consumer surplus? a. $0 b. $0.25 c. $0.50 d. $0.75 Can someone please explain to me why the correct answer here is $0.25? I did the calculations and i keep getting $0 the follwing is my calculationsarrow_forwardFigure 7-6 PRICE 0" A с D B (5) G QUANTITY Refer to Figure 7-6. Area A represents Supply producer surplus to new producers entering the market as the result of an increase in price from P₁ to P₂. the increase in consumer surplus that results from an upward-sloping supply curve. the increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂- the increase in producer surplus to those producers already in the market when the price increases from P₁ to P₂.arrow_forward
- Producer surplus from a unit of output is the difference between the market price and the seller's cost of producing that unit. a. True b. Falsearrow_forwardPrice per pound Price per pound $9 8965 7 32 1 0 $9 8 7 6 5 4 3 2 -N Panel (a) An increase in demand LO Panel (c) An increase in supply S₁ 5 10 15 20 25 30 35 40 45 Quantity (millions of pounds per month) D₁ D₂ S₁ S₂ 0 5 10 15 20 25 30 35 40 45 Quantity (millions of pounds per month) Price per pound Price per pound $9 8 7 6 2 1 $9 8 7 65 Panel (b) A decrease in demand 4 3 2 1 D₂ 0 5 10 15 20 25 30 35 40 45 Quantity (millions of pounds per month) D₁ Panel (d) A decrease in supply $₂ S₁ D₁ 0 5 10 15 20 25 30 35 40 45 Quantity (millions of pounds per month)arrow_forward1. The demand curve for cab rides is p = 5 · y where y represents passenger miles. %3D 1,000' The supply curve is p = 2 for y< 2,500 and it becomes perfectly inelastic at y = 2,500. (i) Find the equilibrium price and quantity. (ii) Find the consumers' surplus and producers' surplus. (iii) Suppose that an excise tax of e = 0.50 per passenger mile is imposed on suppliers. Find the new equilibrium price and quantity. (iv) Finally, suppose that a sales tax of t= 0.50 is imposed on consumers. (The excise tax is still in place.) Find the new equilibrium price and quantity. (v) Explain briefly why the economic burden of the tax and the deadweight loss from imposing the tax are different for the excise tax and the sales tax.arrow_forward
- The graph represents the market for sweatshirts. After a $20 subsidy is given to consumers, which of the following statements is true? Tprice 50 45 40+ 35 30 25- 20- 15- 10- 5- +++ 100 200 300 400 500 600 700 800 quantity O A. Suppliers will receive $35 per sweatshirt and there will be a deadweight loss of $2000. B. The value of producer surplus is $1000 after the imposition of the subsidy. O C. The subsidy will cost the government less than $10,000.arrow_forwardThe diagram to the right shows a market in which a price floor has been imposed. Identify the K following (enter al values as integers). a. The deadweight loss in $. b. The transfer of consumer surplus to producers is $. c. Producer surplus with this price floor is d. Consumer surplus with this price floor is $20000 6.00 5.00 3.00 2.00 30,000 60,000 Quantity Demand dduarrow_forwardSuppose the government imposes a $2 tax on this market 10 X 12345678910 QUANTITY Refer to Figure 6 14 Suppose D,represents the demand curve for gasoline in both the short run and long run, S,represents the supply curve for gasoline in the short run, and Sprepresents the supply curve for gasoline in the long run. After the imposition of the $2 ux, the price paid by buyers will be Select one: O a. unable to be determined without additional information Ob higher in the long run than in the short run OC. higher in the short run than in the long rus Od. equivalent in the short run and the long run.arrow_forward
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