Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 8, Problem 4SPPA
To determine
To explain:
The effect of tax cut on the price and production of gasoline provided the price is increased suddenly due to the global shortage of the oil.
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if the city of San Jose removes a tax on hotel rooms, then the price paid by buyers will
Group of answer choices
1. increase, and the price received by hotel owners will increase.
2. increase, and the price received by hotel owners will decrease.
3. decrease, and the price received by hotel owners will increase.
4. decrease, and the price received by hotel owners will decrease.
A $0.15 tax levied on the sellers of Snickers chocolate will cause the
Group of answer choices
1. supply curve for Snickers chocolate to shift down (=increase) by $0.15
2. supply curve for Snickers chocolate to shift up (=decrease) by $0.15.
3. demand curve for Snickers chocolate to shift down (=decrease) by $0.15.
4. demand curve for Snickers chocolate to shift up (=increase) by $0.15.
Graph the following
In the market for smartphones, the price elasticity of supply is +0.8, and the price elasticity of demand is -1.2. At equilibrium, price is $800 and quantity is 400000.
(1a) Assuming supply and demand are linear, reconstruct and draw the supply and demand curves. Label the intercepts.
(1b) To help consumers and phone-makers, the government proposes to subsidize smartphones by $80 each. What are PB and PS after the subsidy? What is the new equilibrium quantity? Illustrate them on the same graph.
(c) Calculate the change in consumer surplus, producer surplus, government expenditure, and deadweight loss and identify them on the graph.
1. Use the graph below to answer the questions that follows:
Price
Dollars
per gallon
GH¢9.00
GH¢7.00
GH¢4.00
12,000 18,000 30,000
Quantity
(gallons per day)
d. Suppose imposition of maximum price legislation reduced the price oil from
the equilibrium price to the maximum price control price. Calculate:
Price elasticity of demand
Price elasticity of supply
i.
ii.
e. From your calculation, which of the two curves is more elastic? Explain
your answer.
Chapter 8 Solutions
Foundations of Economics (8th Edition)
Ch. 8 - Prob. 1SPPACh. 8 - Prob. 2SPPACh. 8 - Prob. 3SPPACh. 8 - Prob. 4SPPACh. 8 - Prob. 5SPPACh. 8 - Prob. 6SPPACh. 8 - Prob. 7SPPACh. 8 - Prob. 8SPPACh. 8 - Prob. 9SPPACh. 8 - Prob. 10SPPA
Ch. 8 - Prob. 1IAPACh. 8 - Prob. 2IAPACh. 8 - Prob. 3IAPACh. 8 - Prob. 4IAPACh. 8 - Prob. 5IAPACh. 8 - Prob. 6IAPACh. 8 - Prob. 7IAPACh. 8 - Prob. 8IAPACh. 8 - Prob. 9IAPACh. 8 - Prob. 10IAPACh. 8 - Prob. 1MCQCh. 8 - Prob. 2MCQCh. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQ
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