Consider two separate perfectly competitive markets with downward sloping demand and no externalities. Demand is identical in both markets. Supply is different, bu perfectly inelastic in both markets. The government has imposed a price CEILING at $5 in both markets. The price ceiling is binding in market BIND. In market NOBIN the same $5 price ceiling, is not binding. Trade is not permitted across markets. Which of the statement below is TRUE O Producers will want to move from NOBIND to BIND if they are able to. O If the two markets combine into one merged market with the same price ceiling of $5, more total goods will be traded compared to when they are separate. O If we remove the price ceiling in BIND, more goods will be traded. O Producers will want to move from BIND to NOBIND if they are able to.

labeled): Pricel P Market T This is a standard supply and demand graph that represents what's happening in a specific market (the current market price and quantity are U W Y V X N Q Market Supply Demand Quantity

In the figure, the supply curve that includes external costs is O A. S₁. O B. neither S, nor S₂ because the curve would be horizontal. OC. S₂- O D. neither S, nor S₂ because the curve would be vertical. Price P₂ N P₁ S2 Q₁ Q₂ Quantity per Time Period S₁

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Using your knowledge from Topics 1-7, which of the following statements about Pareto optimal outcomes is false? Every outcome which is Pareto optimal must be a Pareto improvement over all other outcomes. An outcome which maximises total surplus is always Pareto optimal. Pareto optimal outcomes can be ordered in terms of total surplus. An equilibrium in a competitive market is an outcome which is Pareto optimal. O None of the above. No answer.

DROP OFF BU rEDAY @UPM 27 9. DEADWEIGHT LOSS WITH PRICE CONTROLS If an equilibrium position is less than perfectly efficient, the loss in total surplus (CS + PS) is termed "deadweight loss." If D and S are linear, then DWL is measured as the area a triangle, the "loss triangle." The area of a triangle is half of (base X height). > Suppose that demand and supply equations in a competitive market are: Demand: P = 30 – 0.6Q Supply: P = 6 + 0.4Q a. Compute the market equilibrium. (Q*, P*) = ( b. Calculate consumer surplus and producer surplus at the market equilibrium. Producer surplus (PS) is the area above the supply curve and below the price. CS* = PS* = C. Suppose that a price floor of Pr = 24 is imposed by the government. Find the equilibrium quantity with the price floor. Then calculate consumer surplus, producer surplus, and deadweight loss at the regulated equilibrium. CSt = PS = DWL =

market Describe the main characteristics of the types given below. Describethe main characteristics of the supply side and the demand side of the markets. How do sellers interact with each other in the markets? i)Perfectly competitive market

Which of the following are characteristics of an efficient market? Select all that apply. Only producer surplus is maximized Only consumer surplus is maximized. Total surplus (aka social welfare) is maximized Quantity supplied equals quantity demanded. Deadweight loss equals zero. Willingness to pay exceeds willingness to sell at the margin. Willingness to sell exceeds willingness to pay at the margin. There is a tax. There is a price ceiling. There is a price floor. OO0O00

The equilibrium price, p * , in a market is the price that makes: O The quantity offered is equal to the quantity demanded O The market works best O The consumer surplus will be as large as possible O The profit will be the largest possible