Principles Of Microeconomics
7th Edition
ISBN: 9781260111088
Author: Robert H. Frank, Ben Bernanke, Kate Antonovics, Ori Heffetz
Publisher: McGraw-Hill Education
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Chapter 3, Problem 3RQ
To determine
Check whether the imposition of gasoline price control to protect the poor from rising gasoline price.
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Explain what would be likely to happen if the government placed a price ceiling of $1/gallon on gasoline. Your answer should consist of a complete well-written paragraph using complete sentences as well as a supply and demand diagram.
What would be the impact of introducing a minimum allowable price on a highly desirable product?
The government in your country is considering three programs that affect the market for cigarettes.
Program 1: Media campaigns and labelling requirements aimed at making the public aware of the dangers of cigarette smoking
Program 2: A price-support program for tobacco farmers
Program 3: A cap on the number of cases of cigarettes sold per quarter at 20,000 cases.
The aim of the government is to support farmers while reducing the consumption of cigarettes. What program of combination of programs should be implemented?
Why?
Chapter 3 Solutions
Principles Of Microeconomics
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- Can you propose a policy that would induce the market to supply more rental housing units?arrow_forwardHow is the price of gasoline determined in a competitive market? What predictions can you make about the movement of price and quantity in the U.S.? To answer this question, you should use $2.00 per gallon as the current equilibrium price and you should assume that producers and consumers in this market are both somewhat price inelastic (though not perfectly inelastic). For the prediction, consider the impact of a hypothetical hurricane in the Gulf of Mexico that negatively impacts oil refineries and crude oil rigs. Use mathematical equations and graphs.arrow_forwardThe government in your country is considering three programs that affect the market for cigarettes. Program 1: Media campaigns and labeling requirements aimed at making the public aware of the danger of cigarette smoking. Program 2: A price support program for tobacco farmers. Program 3: A cap on the number of cases of cigarettes sold per quarter at 20,000 cases. The aim of the government is to support farmers while reducing the consumption of cigarettes. What program or combination of programs should be implemented and why?arrow_forward
- Government price controls like price ceilings and price floors will still lead to equilibrium between demand and supply. True or Falsearrow_forwardThe government in your country is considering three programs that affect the market of cigarettes. Program 1: media campaigns and labeling requirements aimed at making the public aware 0f the dangers of cigarette smoking. program 2: A price-support program for tobacco farmers. Program 3: A cap on the number of cases of cigarettes sold per quarter at 20,000 cases. The aim of the government is to support farmers while reducing the consumption of cigarettes. What program or combination of programs should be implemented? Choose 1 Program 3 Program 1 Program 1 and 3 Program 2 Reduce quantity of cigarettes consumed and reduce price of tobacco All three programs Reduce quantity of cigarettes consumed and reduce price of cigarettes Reduce quantity of cigarettes consumed and increase price for tobacco Program 1 and Program 2 Reduce quantity of cigarettes consumed and increase price for cigarettesarrow_forwardCreate at least one graph that shows the demand curve, the supply curve, shifts in demand and/or supply curve, changes in equilibrium quantity and equilibrium price, price ceilings and/or price floors. You don’t need to look for any statistical data regarding quantities or prices for the product.arrow_forward
- If the government sets a price ceiling in the market for fuel oil that falls below the equilibrium price , it will Question 14 options: lead to the quantity demanded of fuel oil exceeding the quantity supplied. lead to the quantity supplied of fuel oil exceeding the quantity demanded. decrease the demand for fuel oil. increase the supply of fuel oil. have no effect in the market for fuel oil.arrow_forwardVolkswagen’s reputation among car buyers was shattered when the public discovered it was cheating on its emissions checks. What happened to equilibrium prices and quantities in the market for Volkswagen after this scandal? The equilibrium pricearrow_forwardSuppose the government decided that, since gasoline is a necessity, its price should be legally capped at $1.30 per gallon. What do you anticipate would be the outcome in the gasoline market?arrow_forward
- How would each event affect the market for COVID-19 vaccines? Does the event cause a change in demand or a change in the quantity demanded? Is the change positive or negative? Or does the event cause a change in supply or a change in the quantity supplied? Is the change positive or negative? Explain the mechanism for the change and what happens to equilibrium price and quantity. a) The vaccine is approved for children under the age of 12. b) The U.S. government provides a subsidy that allows the price of the vaccine to be $0 for everyone. c) Several vaccines pass Phase 3 (large-scale efficacy tests) and are approved by the FDA for full use. d) A truck carrying the Pfizer vaccine has a malfunction and the refrigeration requirements aren’t met, so all the doses go bad. e) School districts and health care facilities add a requirement for getting the vaccine for all employees.arrow_forwardAn increase in taste for the good with a simultaneous decrease in subsidies will cause the equilibrium price to fall and equilibrium quantity to increase. True or Falsearrow_forwardThe U.S. government has subsidized ethanol production since 1978. With the advent of affordable electric cars, policymakers are considering whether to allow the subsidy to expire. The accompanying graph represents the market for ethanol. Move the supply and/or demand curves to show how reducing the subsidy will affect the ethanol market. Equilibrium price? may increase or decrease, but it is impossible to know for sure. decreases. remains constant. increases.arrow_forward
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