MACROECONOMICS >IA<
FD Edition
ISBN: 9781260510904
Author: McConnell
Publisher: MCG
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Question
Chapter 3, Problem 5P
To determine
Subsidies on public colleges.
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Students have asked these similar questions
please plot a graph showing the effect of a government subsidy on the market for surgical masks.
Please answer these two questions using the information from above:
The government wants to increase production of this good. Would it make more sense to offer a subsidy or a tax?
Based on your previous answers, would the government plan to increase production be likely to be effective or ineffective? Explain your answer.
True or false: Granting subsidy on food will increase social welfare. Explain your answer with a graph.
Chapter 3 Solutions
MACROECONOMICS >IA<
Ch. 3.6 - Prob. 1QQCh. 3.6 - Prob. 2QQCh. 3.6 - Prob. 3QQCh. 3.6 - Prob. 4QQCh. 3.A - Prob. 1ADQCh. 3.A - Prob. 2ADQCh. 3.A - Prob. 3ADQCh. 3.A - Prob. 4ADQCh. 3.A - Prob. 5ADQCh. 3.A - Prob. 6ADQ
Ch. 3.A - Prob. 7ADQCh. 3.A - Prob. 1ARQCh. 3.A - Prob. 2ARQCh. 3.A - Prob. 3ARQCh. 3.A - Prob. 4ARQCh. 3.A - Prob. 5ARQCh. 3.A - Prob. 6ARQCh. 3.A - Prob. 1APCh. 3.A - Prob. 2APCh. 3.A - Prob. 3APCh. 3 - Prob. 1DQCh. 3 - Prob. 2DQCh. 3 - Prob. 3DQCh. 3 - Prob. 4DQCh. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - Prob. 1RQCh. 3 - Prob. 2RQCh. 3 - Prob. 3RQCh. 3 - Prob. 4RQCh. 3 - Prob. 5RQCh. 3 - Prob. 6RQCh. 3 - Prob. 7RQCh. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7P
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- Governments often attempt to boost the income of some agricultural producers with a variety of policies. We will discuss this in depth later in the course, but two approaches often discussed in introductory economics courses are quotas and production subsidies. Using basic supply and demand analysis, discuss how these policies work with emphasis on their similarities and differences. Does the elasticity of demand matter when comparing the policies?arrow_forwardPlease refer to the background information below to answer the following three questions. Consider the following supply and demand schedule of chocolate. Price ($ per unit) Quantity Demanded (units) Quantity Supplied (units) 295 95 120 40 45 270 245 50 55 60 145 170 195 220 195 65 70 170 220 145 245 75 120 95 270 295 80 85 70 320 90 45 20 345 95 370 33. Suppose initially the chocolate market is in an unregulated equilibrium. If the government imposes a tax of $10 for cach unit of the chocolate sold, the new equilibrium price paid by the consumers will be $[ Answer33 ]. 34. Given the above information, the government's tax revenue will be $[ Answer34 ]. 35. Suppose initially the chocolate market is in an unregulated equilibrium. If the government imposes a subsidy of $10 for each unit of the chocolate sold, the new equilibrium quantity would be [ Answer35 ] units.arrow_forwardNow let's introduce scholarships. These act as a subsidy by driving a wedge between the price that students pay for tuition and the amount that the university receives. In particular, we say that ps = p + B, where B is the "size" of the scholarship. Our new equilibrium condition is that 3ps = 40-pD. Substitute the identity for ps in terms of pD into the equilibrium condition (making sure to distribute the 3 correctly) and solve for equilibrium prices (with B still on the right-hand side). Next, plug ps into qs or pD* into qº to obtain the equilibrium number of students enrolled in terms of B. If the university seeks to enroll 33 (thousand) students, we In this case, we have ps* = $ must have B* = $ and pD* = $ If the university instead seeks to enroll 36 (thousand) students, we must have B** = $ . In this case, we have ps" = $ and pD** = $arrow_forward
- Consider the attached graph showing the supply and demand for rental apartments around the UH. campus. If the government were to subsidize housing by $1000 per unit per month, then the quantity of rental apartments would____ (increase or decrease) by____ thousand units. The rental price received by landlords inclusive of the subsidy would ____(increase or decrease) by_____ dollars per month while the price paid by tenants, net of the subsidy, would____ (increase or decrease) by____ dollars per montharrow_forwardSuppose the government of the island has decided to make tomatoes more affordable to consumers by imposing a fixed per unit subsidy. Thus, start with the original demand (Qd = 50 – 5P) and supply (Qs = 5P – 25) and analyze this new intervention, the subsidy. The subsidy works like this: tomato sellers receive a $4 refund from the government for each kilogram of tomatoes they sell to consumers. What is the price that the producers will effectively earn for their tomatoes, inclusive of the subsidy? How much will the government spend on tomato subsidies in this case in total? (Recall the units of measurement: P is the price in dollars per kilogram of tomatoes; and Q is the quantity of tomatoes, expressed in thousands of kilograms.) Produce a new graph depicting the new, post-subsidy equilibrium complete with (solved) values for the new price and quantity. Please include the original supply curve in this graph, in addition to the new “effective supply” curve; and clearly label the shift…arrow_forwardSuppose the price elasticity of demand for smartphones is 0.5 (absolute value), while the price elasticity of supply is 1.9. If the government imposes a per-unit tax of $100 on the sellers of smartphones, how will the price and quantity transacted of smartphones change? Will the sellers or the buyers bear a larger tax burden? Will the market be able to achieve economic efficiency after the tax is imposed? Explain with a diagram.arrow_forward
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