Answered: Show and explain how the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Critique the following statement as True or False and explain your reasoning in 2-3 sentences. "Market failures are observed when government intervention prevents market forces from guiding marketstoward an equilibrium."
In competitive markets, we know that: P= MWTP P= MC MC= AC P= Min AC Which result(s) implies that the outcome is socially optimal?
B. Let’s consider the market for flour in a different town. Assume that it is efficient (i.e. that there are not external costs to producing flour, and no external benefits from consuming it). Price ($/lb) Quantity Supplied (thousands of lbs per day) Quantity Demanded (thousands of lbs per day) 1.5 8 14 2 9 13 2.5 10 12 3 11 11 3.5 12 10 4 13 9 What is the price and quantity of flour sold without government intervention. Graph this equilibrium. XXXX 2. Suppose that, alarmed by the inability of many poorer consumers to buy flour, the government institutes a $2/lb price ceiling. How much flour will suppliers wish to sell, and how much will buyers demand? How much flour will actually be sold? Show this outcome on the same graph you drew for question 1. XXXX 3. Describe, in one sentence each, three problems that this policy might create? Please do not simply copy down phrases from the textbook, but instead describe ways that…
Q2. "Since all market allocations are Pareto efficient there can be no justification for any kind of government intervention as it would imply that the free market is being interfered with"- Comment. (6) (Your answer to Q2 should not exceed more than one paragraph). please give workings.
How does the sorting of consumers in the primary market, based on their willingness to pay for tickets, affect the allocation of resources and the efficiency of the market?
ECON 201 (Section E) – Homework 4 Name: Question 1: Suppose the market for cigarettes can be represented by the following demand and supply Q = 5000 – 20P Q = 40P – 400 equations: a) Find the free market equilibrium: price, quantity, CS, PS, and TS. Graph the market below. b) Suppose the government comes in and adds a tax on each box of cigarettes sold and makes consumers pay for this tax (when they buy the good). The new demand curve with tax is Q = 5000 – 20(P + 10). Graph the situation below. Calculate the new equilibrium price and quantity with the tax; how much the tax is per box of cigarettes; the new CS, PS, Tax Revenue, and TS; the DWL the tax creates (if any). i. ii. ii. iv.
Does the first welfare theorem apply to the market for oil and gas? Explain your answer in one or two sentences.
Conversely, show geometrically the effect of a decrease in Price (i.e., BELOW the equilibrium price). What “economic problem” is created now in the market. Measure geometrically he magnitude or distance of such “economic problem”. Again, in the face of such an economic problem, where private sector buyers and suppliers could not do anything more, which economic actor should come to intervene properly? Discuss what should that intervener do amidst such economic problem faced by the microeconomic actor – NOTABLY THE PRODUCER OR SELLER. As an Economist (or beyond the limits of Economic studies), what would you recommend to the VEGETABLE PRODUCERS and to the GOVERNMENT as well? Discuss exhaustively.
When goods are allocated in a way that creates the largest economic surplus: output is evenly allocated across firms. production is minimized. efficient allocation has been achieved. the marginal benefit of the last unit bought is the maximum marginal benefit.
Electric cars (ECs) are an important part of meeting global goals on climate change. ECs have emissions up to 33% lower than diesel cars. However, In Europe, electric cars account for only 0 65% of all new sales in 2020 Suppose the market for ECs is perfectly competitive. The market demand for ECs is given by: p= 15 - 20 and the market supply for ECsis given by p 4Q The marginal social benefit of adopting ECs is given by p = 15-Q To encourage the purchase of ECs, the government decides to subsidise the consumers The optimal level of subsidy is for the market to reach a socially optimal equilibrum.

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Show and explain how the distribution/allocation constraints are satisfied by any point in an Edgeworth-box diagram.