Q13 Due to a petroleum pipeline break, the price of gasoline in Georgia rises from $2 pergallon to $5 per gallon? In response, the governor signs an executive order thatmakes it illegal for gas stations to charge more than $3 per gallon. What is the likelyoutcome of this policy?There will be a surplus of gasoline.There will be a shortage of gasoline.OPeople who need gasoline the most will be able to get it.O Gas stations will invest in importing more gasoline in the market because of thelower price.Lower gas prices will allow more people to purchase gas at low prices.

This is the case of a price ceiling since the government has set an upper limit on the price of…

Answered: Due to a petroleum pipeline break, the…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 39P: When someones kidneys fail, the person needs to have medical treatment with a dialysis machine...

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A recent study found that the demand and supply schedules for financial calculators are as follows: Price/calculators Quantity Demanded Quantity Supplied 20 160 40 40 140 60 60 120 80 80 100 100 100 80 120 120 100 Co an Coll 80 60 40 D. 20 40 60 80 100 120 140 160 a) Determine: Price of Equilibrium_ and Quantity of Equilibrium b) Determine the effect of $60 Price Ceiling. Is it binding? Why? Will it cause Shortage or Surplus? And by how much? c) Determine the effect of $120 Price Floor. Is it binding? Why? Will it cause Shortage or Surplus? And by how much?
3In the United States, the long-run elasticity of oil demand has been estimated at -0.5. Somepolicymakers and environmental scientists would like to see the United States cut back on its useof oil in the long run. We can use this elasticity estimate to get a rough measure of how high theprice of oil would have to permanently rise in order to get people to make big cuts in oilconsumption. How much would the price of oil have to permanently rise in order to cut oilconsumption by 50%?
The equations describing demand and supply curves for pizzasare given as follows:Q= 500 –P and Q= 2P + 200. a.What is the equilibriumpriceand quantity? b.Suppose that the price levelis set by the government at $150. Will there be a shortage or surplus? Explain why . What is the size of the surplus or shortage ?
Excess supply of a product will cause the price to As a consequence Market for pizza of the price change, the quantity demanded will quantity 14.00- 13.00- 12.00- 11.00- supplied will increase decrease At the current market price PMatet of $9.00, there i of thousand pizzas per month (Enter your response as a positive integer.) 10.00- 9.00- PMarket a 8.00- * 700- 8 6.00- E 500- 4.00- 3.00- 2.00- 1.00- 40 22 510 15 20 25 30 35 40 45 so 55 60 Thousands of pizzas per month 0.00-
Consider public policy aimed at smoking.a. Studies indicate that the price elasticity of demandfor cigarettes is about 0.4. If a pack of cigarettescurrently costs $5 and the government wantsto reduce smoking by 20 percent, by how muchshould it increase the price?b. If the government permanently increases theprice of cigarettes, will the policy have a largereffect on smoking one year from now or five yearsfrom now?c. Studies also find that teenagers have a higherprice elasticity of demand than adults. Why mightthis be true?
Consider the market for chicken burger. For each of the events listed here, identify whichof the determinants of demand or supply are affected. Also indicate whether demand orsupply increases or decreases. Then draw a diagram to show the effect on the equilibriumprice and equilibrium quantity of chicken burger.a. Nowadays grade IX-XII students throughout the country thinks that chicken burger is the mostconvenient meal for lunch time in schoolb. Price of chicken meat is now higherc. People expect 10% discount on chicken burger in December as a Christmas offerd. Price of hotdog fallse. A stock market crash lowers people’s wealth [Consider chicken burger is inferior good for e)]
The market for skateboards currently has no taxes. The equilibrium quantity is 5,000/month, and the equilibrium price is $40. The governor is considering placing a $10/skateboard tax on skateboard producers, and expects to raise $50,o00/month in revenue. Is the governor correct? O Yes, because producer and consumer responses will cancel out. O No, because the quantity produced and consumed will fall below 5,000/month once the tax is imposed. O No, because it doesn't matter whether the consumer or producer is taxed. O Yes, because 5,000 x $1O = $50,000.
When someone’s kidneys fail, the person needs tohave medical treatment with a dialysis machine (unlessor until they receive a kidney transplant) or they will die.Sketch a supply and demand diagram, paying attentionto the appropriate elasticities, to illustrate that the supplyof such dialysis machines will primarily determine theprice.
The equilibrium price is the * O price at which the market clears average price consumers are willing to pay. O price at which all consumers are satisfied. O price at which quantity supplied is maximized. O price at which all potential suppliers will sell. Consider the market for arugula, a normal good. Which of the following changes would result in an increase in both the equilibrium price and the equilibrium quantity of arugula? * O A decrease in consumer income An increase in the price of salad dressing, a complement A decrease in the price of radicchio, a substitute An increase in the price of water irrigation for arugula farms An increase in population
Daniel Patrick Moynihan, former senator from New York, once proposed a federal sales tax on ammunition as a way to achieve gun control without violating the second amendment to the U.S. constitution. How might Moynihan's proposal work? Select one: O a. By increasing the cost of a substitute, it would decrease the demand for guns. O b. By increasing the cost of producing a gun, it would decrease the supply of guns. O c. By increasing the cost of a complement, it would decrease the demand for guns. O d. By increasing the cost of using the gun, it would decrease the supply of guns. Check Previous page Next page MacBook Pro G Search or type URL 2$ & * 7 8 9 CO
If the price of a haircut is $15, the number of haircuts provided is 100. If the price rises to $30 perhaircut, barbers will work much longer hours, andthe supply of haircuts will increase to 300. What isthe price elasticity of supply for haircuts between$15 and $30?
Suppose the demand for new automobiles in the United States is describedby the equation Qd = 5.3 - 0.1P where Qd is the number of new automobilesdemanded per year (in millions) when P is the average price of anautomobile (in thousands of dollars).a. What is the quantity of automobiles demanded per year when the averageprice of an automobile is $15,000? When it is $25,000? When it is$35,000?b. Sketch the demand curve for automobiles. Does this demand curve obeythe law of demand?

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