Assume a market price is set artificially high. In other words, the price is set above the equilibrium price. How will this affect the market? 1. Every consumer loses surplus, and it all gets transferred to producers 2. Every producer gains surplus, due to the higher price now being charged.  3. Some consumers drop out of the market, and those left some surplus 4. None of these are correct

Suppose the demand of a product decreases. What will be the effect on the market equilibrium price and quantity if supply is perfectly inelastic? If supply is perfectly inelastic, then  A. the equilibrium price will decrease and the equilibrium quantity will decrease. B. the equilibrium price will decrease and the equilibrium quantity will not change. C. the equilibrium price will not change and the equilibrium quantity will not change. D. the equilibrium price will increase and the equilibrium quantity will increase.

a) In the market for sugary drinks, the current equilibrium price is $10 and the equilibrium quantity is 30. The demand choke price is $50 and the supply choke price is $5 (a) Draw a demand and supply diagram, and shade the regions that represent consumer and producer welfare. Calculate the Total welfare in this market b) In this market, you now know that E D = −0.4 and E S = 1.2. Redraw your diagram in part (a) with the correct sloping curves. In this part you do not have to shade the welfare regions. All you need to do is redraw the diagram with the same equilibrium price and quantity, and choke prices but adjust the slope of each curve to reflect their respective elasticity c) If a tax was to be implemented in this market, what percentage of the burden is borne by the buyer? d) The government plans to discourage the consumption of sugary drinks and as such, they implemented a $1 tax on every bottle produced. In this situation, the suppliers are taxed directly but they hope to pass…

In a market, if the price of a good is set below the equilibrium price, what will happen? a) Shortage b) Surplus c) Equilibrium d) Price ceiling