Microeconomics
11th Edition
ISBN: 9781260507041
Author: Colander, David
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 8.W, Problem 6QE
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A price ceiling is intended to benefit which group of people?
consumers
producers
The Government
Qd = 1,600 - 125P
Qs = 440 + 165P
Quantities are measured in millions of bushels; prices are measured in dollars per bushel.
a. Calculate the equilibrium price and quantity that will prevail under a completely free market.
b. Calculate the price elasticities of supply and demand at the equilibrium values.
c. The government currently has a $4.50 bushel support price in place. What impact will this support price have on the market? Will the government be forced to purchase corn under a program that requires them to buy up any surpluses? If so, how much?
1四
"cause"
causes
Discuss and provide two examples of how subsidies can be economically harmful.
Chapter 8 Solutions
Microeconomics
Ch. 8.1 - Prob. 1QCh. 8.1 - Prob. 2QCh. 8.1 - Prob. 3QCh. 8.1 - Prob. 4QCh. 8.1 - Prob. 5QCh. 8.1 - Prob. 6QCh. 8.1 - Prob. 7QCh. 8.1 - Prob. 8QCh. 8.1 - Prob. 9QCh. 8.1 - Prob. 10Q
Ch. 8.W - Prob. 1QECh. 8.W - Prob. 2QECh. 8.W - Prob. 3QECh. 8.W - Prob. 4QECh. 8.W - Prob. 5QECh. 8.W - Prob. 6QECh. 8.W - Prob. 7QECh. 8.W - Prob. 8QECh. 8.W - Prob. 9QECh. 8.W - Prob. 10QECh. 8.W - Prob. 11QECh. 8.W - Prob. 12QECh. 8.W - Prob. 13QECh. 8.W - Prob. 14QECh. 8.W - Prob. 1QAPCh. 8.W - Prob. 2QAPCh. 8.W - Prob. 3QAPCh. 8.W - Prob. 4QAPCh. 8.W - Prob. 5QAPCh. 8.W - Prob. 1IPCh. 8.W - Prob. 2IPCh. 8.W - Prob. 3IPCh. 8.W - Prob. 4IPCh. 8.W - Prob. 5IPCh. 8.W1 - Prob. 1QCh. 8.W1 - Prob. 2QCh. 8.W1 - Prob. 3QCh. 8.W1 - Prob. 4QCh. 8.W1 - Prob. 5QCh. 8.W1 - Prob. 6QCh. 8.W1 - Prob. 7QCh. 8.W1 - Prob. 8QCh. 8.W1 - Prob. 9QCh. 8.W1 - Prob. 10QCh. 8 - Prob. 1QECh. 8 - Prob. 2QECh. 8 - How would an economist likely respond to the...Ch. 8 - Prob. 4QECh. 8 - Prob. 5QECh. 8 - Prob. 6QECh. 8 - Prob. 7QECh. 8 - Prob. 8QECh. 8 - Prob. 9QECh. 8 - Prob. 10QECh. 8 - Prob. 11QECh. 8 - Prob. 12QECh. 8 - Prob. 13QECh. 8 - Prob. 14QECh. 8 - Prob. 15QECh. 8 - Prob. 16QECh. 8 - Prob. 17QECh. 8 - Prob. 18QECh. 8 - Prob. 19QECh. 8 - Prob. 20QECh. 8 - Prob. 21QECh. 8 - Prob. 22QECh. 8 - Prob. 23QECh. 8 - Prob. 24QECh. 8 - Prob. 1QAPCh. 8 - Prob. 2QAPCh. 8 - Prob. 3QAPCh. 8 - Prob. 4QAPCh. 8 - Prob. 5QAPCh. 8 - Prob. 1IPCh. 8 - Prob. 2IPCh. 8 - Prob. 3IPCh. 8 - Prob. 4IPCh. 8 - Prob. 5IPCh. 8 - Prob. 6IPCh. 8 - Prob. 7IPCh. 8 - Prob. 8IPCh. 8 - Prob. 9IPCh. 8 - Prob. 10IP
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- Which group is a price floor intended to benefit? consumers producers The Governmentarrow_forwardDo you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.arrow_forwardThe supply and demand curves for corn are as follows: QD = 3,750 - 725P QS = 920 + 690P,where Q = millions of bushels and P = price per bushel. a. Calculate the equilibrium price and quantity that would prevail in the free market. b. The government has imposed a R2.50 per bushel support price. How much corn will the government be forced to purchase? c. Calculate the loss in consumer surplus that would occur under the support program.arrow_forward
- Many cities have experienced a substantial decrease in the amount of garbage being collected after they changed from levying a flat tax on each household to a system where the homeowner is charged a fee for each bag or can picked up. Would this have been the result of a change in demand or a change in the quantity demanded? Would you recommend the flat fee or the fee per bag? Why?arrow_forward“Because consumers as a group must ultimately pay the total income received by farmers, it makes no real difference whether the income is paid through free farm markets or through price supports supplemented by subsidies financed out of tax revenue.” Do you agree?arrow_forwardThe government often meddles in markets, using price ceilings and price floors and taxes which move the market away from free market equilibrium. Should the government meddle in markets? When should it meddle? Should there be rent controls or other price ceilings? Should the government set a minimum wage be $15? Should the government control the price of life saving medicine, such as insulin? Should they set a price ceiling? Or use taxes? How does elasticity of demand affect who will pay the tax? What are some reasons that the government should meddle in markets using price controls and taxes?arrow_forward
- For which of the following goods, the burden of a sales tax is borne more by buyers than by sellers? Group of answer choices poultry iPhone high-end cars labor (i.e., the Social Security Tax)arrow_forwardExplain the economic effects of price supports. Explicitly include environmental and global impacts in your answer. On what grounds do economists contend that price supports cause a misallocation of resources?arrow_forwardThe government in your country is considering three programs that affect the market of cigarettes. Program 1: media campaigns and labeling requirements aimed at making the public aware 0f the dangers of cigarette smoking. program 2: A price-support program for tobacco farmers. Program 3: A cap on the number of cases of cigarettes sold per quarter at 20,000 cases. The aim of the government is to support farmers while reducing the consumption of cigarettes. What program or combination of programs should be implemented? Choose 1 Program 3 Program 1 Program 1 and 3 Program 2 Reduce quantity of cigarettes consumed and reduce price of tobacco All three programs Reduce quantity of cigarettes consumed and reduce price of cigarettes Reduce quantity of cigarettes consumed and increase price for tobacco Program 1 and Program 2 Reduce quantity of cigarettes consumed and increase price for cigarettesarrow_forward
- Q7. THINK LIKE AN ECONOMIST Can you think of at least one good reason that perhaps government should not interfere in market shortages with price-gouging laws? Your response should be 100 words or less.arrow_forwardTaxes The market for pairs of sneakers is described by the following supply and demand curves: Qd = 350P; Qs = 3P - 50. Instead of a price control, the government levies a tax on produces of $20. As a result, the new supply curve is: Qs = 3(P-20) - 50. Does a shortage or surplus (or neither) develop? What is the price the buyer pays, the price the seller receive quantity supplied, quantity demanded, and the size of the shortage or surplus? MacBook Pro Q Search or enter website namearrow_forwardAssume the government imposes an effective minimum wage (i.e., one above the equilibrium wage rate that would otherwise prevail in that market). What does our supply and demand analysis implie?arrow_forward
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