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- Suppose that the demand curve for wheat is Q500 - 10p and that the supply auve is O 10p What are the efects of a subnidy (negative tax) ofs4 per unit paid to produoers on the equlibrium, govemment. subsidy cost, consumer surplus (CS), producer surplus (PS), weifare (W, and deadweight loss (DWL)? Wih the subsidy, the equibrium price is Sand the equilibrium quantity isunits. (Enter your responses as whole numbers) The cost of the subsidy to the govermment is S (Enter your response as a whole number) The change in consumer surplus (ACS) is S (Enter your response as a whole number.) The change in producer surplus (APS) is S Enter your response as a whole number) The change in welttare (AW) is S (Enter your reaponse as a whole number and include a minus sign i necessary Deadweight loss is S (Ender your response as a whole number)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.S- MSC. D- MSB 100 200 300 400 500 600 700 800 Quantity (gallons per day) The figure shows the competitive market for milk. In the figure above, when the quantity of milk produced is 600 gallons per day, what is the deadweight loss? Select one: O a. $50 O b. $500 O C. $250 O d. $125 Price (dollars per gallon)
- Considermarketforagoodcharacterizedbythefollowinginverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX.a. Compute the surplus received by consumers and producers.b. Now suppose all manufacturers of this good are to pay a lump tax of $0.10that will be used by the government regulators to defray some of the environmental cost imposed by this good’s production. What will be the new surplus received by consumers and producers?c. Based on your results in part ‘b’ above, how will you evaluate the impact of this tax policy on the society? Explain55.00 50.00 45.00 40.00- 35.00 30.00 25.00 20.00 15.00 10.00 5.00 5000 O b. $75,000 c. $200,000 O d. $150,000 Demand 10000 15000 20000 25000 30000 35000 40000 Suppose that a price ceiling of $20 is imposed, what will be the deadweight loss? a. $125,000 Suppnt ard es ar 14 O 10 5 price 25 50 D Suppose a tax of $9 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed? $5 Between $5 and $10 Between $10 and $14 $14 quantity
- 2. The demand and supply functions of a gcod are given by P = -Qd + 125, 2P = 3Qs + 30. Determine the equilibrium price and quantity. Determine ako the effect on the market equilibrium if the govemment decides to impose a fixed tax of GHC5 on each good Who pays the tax? (p = 81, q = 44, then p = 83, q = 42) 3. If fixed costs are 18, variable costs per unit are 4, and the demand function is P = 24 - 2Q. Obtain an expression for n in terms of Q and hence sketch a graph of n against Q. a) For what values of Q does the firm break even? (q = 1 or 9) b) What is the maximum profi? (n = 32 at q = 5) 4. Given the supply and demand functions P = Q? + 12Q, + 32, P = -Qå - 4Qa + 200, Calculate the equilibrium price and quantiy. (p = 140, q = 6)11.00 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 300 600 900 O c. $2,500 O d. $1,200 Domand Supply 1200 1500 1800 2100 2400 27 Suppose that a $4 subsidy is given to consumers in this market, what is deadweight loss? O a. $1,800 O b. $2,000Price per mile B C D---- E F H a Supply Demand Miles of taxi service per day Figure 6.6 Refer to Figure 6.6, which shows a market for taxi medallions. If the number of taxi licenses is reduced from Q₂ to Q₁ OA. the gain in consumer surplus equals the loss in producer surplus. B. the gain in producer surplus equals the loss in consumer surplus. OC. the gain in consumer surplus is greater than the loss in producer surplus. OD. the gain in producer surplus is smaller than the loss in consumer surplus.
- Consider a market in which the demand curve is given by P = 9 -0.1Qd, and the supply curve is given by P = 0.2Qs. Suppose the government imposes a price floor of 7 dollars. How much is producer surplus? 100 ○ 40 90 070 Crider a market in which he and by 1-41 Selected Answer88 Awers 0100 70 pics of how much is80 50 A E L Sty MN 500 C T M D P 1000 Dus 700 Note: A, B, ,P represent each area section. In the Insulin market, the government decides to regulate a price with the ceiling prince $50.00. With this regulation, where are the area of producer surplus? OL O A+B O E+F+L OB+FA company is considering building a bridge across ariver. The bridge would cost $2 million to build andnothing to maintain. The following table shows thecompany’s anticipated demand over the lifetime ofthe bridge:Price per CrossingNumber of Crossings,in Thousands$8 07 1006 2005 3004 4003 5002 6001 7000 800a. If the company were to build the bridge, whatwould be its profit-maximizing price? Would thatlevel of output be efficient? Why or why not?b. If the company is interested in maximizing profit,should it build the bridge? What would be itsprofit or loss?c. If the government were to build the bridge, whatprice should it charge?d. Should the government build the bridge?Explain.
