Consider the market for some product X that is represented in the demand-and-supply diagram. For each of the legislated price controls listed, determine the price and quantity exchanged after imposition of control, whether a shortage or surplus develops, and if so, how much. a. a price floor at $28 per unit The price is $ 36 and the quantity exchanged is 100. This means that there is no effect on the market. (Type whole numbers.) b. a price floor at $44 per unit The price is $ and the quantity exchanged is. This means that there is (Type whole numbers.) C Price ($) 76.00- 68.00- 60.00- 52.00- 44.00- 36.00 28.00- 20.00- 12.00- 4.00- 0 25 50 75 100 125 Quantity (units per day) 150 S D 175

The demand for tomatoes is Q = 40-4P and the supply of tomatoes is Q = P +10. Answer the following questions. (a) Suppose that $1 per unit tax is levied on the consumers. Who bears the economic incidence of this tax? (b) Calculate the deadweight loss (c) Suppose that stores will pay $1 per unit tax directly. What will happen to the "sticker price" on tomatoes? How will the size of the consumer tax burden change? (d) Suppose that tax is increased to $2 per unit on the consumers. Calculate the deadweight loss. Compare the size of the deadweight loss with (b).

Market demand is P=125-(3/8)QMarket supply is P=5+(1/8)Q. This time the government imposes a price floor of $45. That is, the price must be either at or above $45.a. Calculate the new equilibrium price and quantity.b. Calculate the new CS (Consumer Surplus) and PS (Producer Surplus). Who gains? Who loses?What is the deadweight loss?

Lesson 10 Question 7

If you catch one hundred cocaine shipments, and the street price does not increase, then have you made any real impact on the supply of product to the consumer?

After Hurricane Katrina damaged many U.S. gasoline refineries in 2005, the price of gasoline shot up around the country. The Federal Trade Commission announced that it would investigate price gouging-charging "too much"-and several members of Congress called for price controls on gasoline. What would have been the likely effect of such a law had it been passed? Price controls on gasoline would have OA. benefited all consumers because gas prices would have been lower. OB. benefited all producers because there would have been no shortages. OC. resulted in a shortage because demand would have exceeded supply. OD. resulted in a shortage because refiners would have shut down their plants in protest. OE. resulted in a market equilibrium because gas would have been affordable

Given the demand function P = 64 - Q and the supply function: P = 4 + ¼ Q. Determine:a. Market equilibrium price and quantityb. The size of the consumer surplusc. The amount of the producer surplus.

1. Consider the market for cell phones in Celltown. Suppose that the inverse demand curve is P = -2Qd + 300 and that the inverse supply curve is P = 3Qs + 50. a. Sketch the inverse supply and inverse demand curves. b. Calculate the equilibrium price and quantity. c. Compute consumer surplus (CS), producer surplus (PS), and total surplus. d. Suppose the Mayor of Celltown institutes a price floor of P = $250 in order to promote the new technology. It is illegal to sell cell phones at a price below P. What is the quantity transacted in the market with the price floor? e. Compute the change in CS and the change in PS. f. Compute the change in total surplus. If you were an economic advisor to the Mayor whose goal is to maximize the total surplus of the city, would you advise continuing the policy or not? Explain. g. A representative of the Association of Cell Phone Manufacturers arrives at the Mayor's office to lobby against eliminating the price floor. i. Explain why economic theory…

There is a price ceiling of $2000. Click on the market price and quantity (assuming the law is strictly followed). tental Price 6000 4000 2000 0 1000 OD E' 2000 QE S 3000 4000 0$ D 5000 6000 Numb Your answer