Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 10, Problem 11P
(a)
To determine
The
(b)
To determine
(c)
To determine
Consumer surplus, producer surplus, total surplus, and
(d)
To determine
Deadweight loss when the individuals with low willingness buy output.
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Consider the market for some product X that is represented in the accompanying demand-and-supply
diagram.
a. Calculate the total economic surplus in this market at the free-market equilibrium price and quantity.
The total economic surplus is $280 per day.
(Round your response to the nearest cent as needed.)
b. Calculate the total economic surplus in this market when a price ceiling at $21 is in effect.
The total economic surplus is $ per day.
(Round your response to the nearest cent as needed.)
c. After imposition of the price ceiling at $21, how many units of this good are no longer being produced
and consumed per day compared to the free-market equilibrium?
unit(s) of this good are no longer being produced and consumed per day compared to
the free-market equilibrium.
(Round your response to the nearest whole number as needed.)
d. Calculate the deadweight loss that results from the imposition of the price ceiling at $21.
per day.
The deadweight loss that results from the imposition of…
Consider the market for some product X that is represented in the
accompanying demand-and-supply diagram.
a. Calculate the total economic surplus in this market at the free-market equilibrium
price and quantity.
The total economic surplus is $ per day.
(Round your response to the nearest cent as needed.)
b. Calculate the total economic surplus in this market when a price ceiling at $14 is in
effect.
The total economic surplus is $ per day.
(Round your response to the nearest cent as needed.)
c. After imposition of the price ceiling at $14, how many units of this good are no longer
being produced and consumed per day compared to the free-market equilibrium?
unit(s) of this good are no longer being produced and consumed per day compared
to the free-market equilibrium.
(Round your response to the nearest whole number as needed.)
d. Calculate the deadweight loss that results from the imposition of the price ceiling at
$14.
Price ($)
38.00
34.00-
30.00-
26.00+
22.00-
18.00-
14.00-
10.00-…
The daily demand and supply curves for milk in the small town of Dairyville are as shown in the figure.
Suppose the government imposes a price ceiling on milk of $5 per gallon.
a. How many gallons of milk will be bought and sold each day after the imposition of the price ceiling?
gallons per day
b. What will be the excess demand for milk each day after the imposition of the price ceiling?
gallons per day
c. What will be consumer surplus after the imposition of the price ceiling?
$ per day
d. What will be producer surplus after the imposition of the price ceiling?
$ per day
e. What will be the loss in total economic surplus each day that results from the imposition of the price ceiling?
$ per day
Chapter 10 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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- Question 4: A government is planning to set a Price ceiling (Maximum price a producer can set). a) What is the consumer surplus and producer surplus at Equilibrium price? The government set a Price ceiling at $30 (in the diagram below). b) $90 Price i) ii) iii) $70 $50 $30 $10 10 20 30 Supply Price ceiling Demand Quantity What is the change in consumer surplus because of the price ceiling? What is the change in producer surplus because of the price ceiling? Who, the producer or the consumer, is benefitted from this government regulation?arrow_forwardSuppose the market demand for organic grass-fed beef is given by Q=100-2P and the supply is given by Q= P/2 (quantity is given in thousand pounds). A) Find the equilibrium price of a pound of beef and the equilibrium quantity. B) Find the consumer surplus (CS) and producer surplus (PS) at the market equilibrium point. C) How will the equilibrium change if the government imposes a price ceiling of $20/pound? D) Show this market with the price ceiling in a supply and demand graph. E) Consider that the consumers who bought the beef at $20/pound are the ones with the highest willingness to pay (scenario 1), what is the new consumer surplus (CSnew) and the new producer surplus (PSnew)? F) What is the deadweight loss (DWL) after the price ceiling in scenario 1? G) What would happen in this market if, instead, the consumers who bought the beef were the ones with the lowest willingness to pay (scenario 2)? (Hint: You don’t have to show it mathematically, or graphically, but write…arrow_forwardConsider the market for mountain bikes. The following graph shows the demand and supply for mountain bikes before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilibrium price and quantity of mountain bikes in the absence of a tax. Then use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilibrium price. Next, use the purple point (diamond symbol) to shade the area representing total producer surplus (PS) at the equilibrium price. (screen shot 1) Suppose the government imposes an excise tax on mountain bikes. The black line on the following graph shows the tax wedge created by a tax of $80 per bike. First, use the tan quadrilateral (dash symbols) to shade the area representing tax revenue. Next, use the green point (triangle symbol) to shade the area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol) to shade the area…arrow_forward
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