ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423548
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 4, Problem 5.9PA
To determine
Reasons behind accepting lower price in case of market surplus.
Concept Introduction:
Market surplus is a situation in which there is
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12. Market equilibrium and disequilibrium
The following graph shows the monthly demand and supply curves in the market for calendars.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
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Market for Calendars
80
I Price
(Dollars per
calendar)
72
Supply
24
64
Quantity
Demanded
(Calendars)
Quantity Supplied
(Calendars)
56
500
150
48
40
32
Demand
24
PRICE (Dollars per calendar)
4. Currently the equilibrium price and quantity in the milk market are $4 per gallon and
100,000 gallons. The Price Elasticity of Demand is determined to be 0.80 while the
Price Elasticity of Supply is determined to be 1.20. A price floor is set at 20% above the
current equilibrium price.
(a) Determine the dollar amount of the price floor.
(b) Determine the Qs after the price is imposed.
(c) Determine the Qd after the price is imposed.
Price
$25
20
15
10
10
15
20
25 Quantity
At the equilibrium price, the area of consumer surplus is
just the number, no symbols or letters; and use decimals as it applies)
dollars. (write
Chapter 4 Solutions
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
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- Only typed answer If the demand in a market is Q = 63 – 4P and the supply is Q = -3 + 3P, then what is the equilibrium price (rounded to two decimal places)?arrow_forward(Figure: Market for Grapefruits 1) Consider the market for grapefruit. At a market price of $4, what is total consumer surplus? Price ($/bag | of grapefruit) $10- $320 $160 $80 $120 8 6 4 2 0 20 40 60 80 100 Quantity of grapefruits (bags)arrow_forward(Figure: Market Demand for Oranges) Consider the figure Market Demand for Oranges. The amount by which the total If the price of oranges is benefits of oranges to consumers exceed consumers' total expenditures on oranges is called B, this quantity is depicted by the area Price (per bushel) 0 producer surplus; BCD consumer surplus; OCDE consumer surplus; BCD net benefit; OBDE Market Demand Quantity (per period)arrow_forward
- 3. (Hand in) The elasticity of demand in the market for softdrinks is known to be ED = -1. It is known that if the government would implement a one dollar per gallon tax, then the price paid by consumers would go up by 0.8 dollars per gallon. Calculate the elasticity of supply Es.arrow_forward18. _____________________refers to various quantities of a commodity or service that a consumer would purchase at a given time at various prices in a market.arrow_forwardThe table below shows the total demand and supply for bushels of wheat per month. Price per bushel ($) Demand Supply (*000) ('000) 85 3.40 72 80 3.70 73 75 4.00 75 70 4.30 77 65 4.60 79 60 4.90 81 Required: The government concluded to establish a price ceiling for bushels of wheat at $3.70. Explain the effect of such action by the government. (i)arrow_forward
- QUESTION 7 The demand for rubber erasers consists of two components. The first component is the demand for rubber erasers by art students. This demand is given by QA = 19,500 - 325P. The second component is the demand for rubber erasers by all others. This demand is given by Qo = 32,000 - 2,000P. (a) What is the total quantity demanded of rubber erasers if the price of an eraser is: (i) $10 (ii) $15 (iii) $20 (iv) $30 (v) $70 (b) Assume that the supply of rubber erasers is given by Qs = 14,000+ 175P. (i) Find the equilibrium price and the equilibrium quantity. (ii) Calculate the total consumer surplus. [Hint: It may be easier if you calculate the consumer surplus for art students and the consumer surplus for all others separately, and then add them up.] (c) Assume that the supply of rubber erasers is given by Qs = 8,390 + 180P. Find the equilibrium price and the equilibrium quantity. 10 (DC) EN510arrow_forwardThe following table shows the demand and supply of tickets of a football game which will be held at Shah Alam Stadium. Unit Price (RM) Market Demand (units) Market Supply (units) 20 5000 3500 40 4000 3500 60 3000 3500 80 2000 3500 100 1000 3500 a) On your foolscap paper, draw the demand and supply curves. Label all axes, all curves and the equilibrium point. (6m) b) How much is the equilibrium price and equilibrium quantity? (2m) c) At which price will there be a surplus of 2500 tickets? (1m) d) What will happen when the market price is RM40? Show your answer on the same diagram. (3m) e) Why is the supply of tickets fixed at 3500? (1m)arrow_forward-x 230. If the demand Curve is the form of P= 10e ? where P is the price and x is the demand, what is the Price elasticity of Demand? (a) Kx (b) 는 (c) 5x (d) Nonearrow_forward
- 20. An increase or decrease in the price of wheat results in a shift of its demand curve.(a) True(b) Falsearrow_forward9) MARKET EQUILIBRIUM Suppose the demand for a product is given by p = d(q) = -0.4q + 300 and the supply for the same product is given by p = s(q) = 0.2q. For both functions, q is the quantity and p is the price, in dollars. a. Find the equilibrium point. (i.e. the market demand quantity and the market price) b. Find the consumer surplus at the equilibrium price. c. Find the producer surplus at the equilibrium price.arrow_forwardPrice per Ice-cream (Rs.) Demand for Ice cream (Qd) Supply for Ice- cream (Qs) 140 500 1500 120 750 1200 100 1000 1000 80 1250 750 60 1500 600 40 1750 300 (i) Draw the market equilibrium for Ice cream. (ii) Find out equilibrium price and quantity. (iii) Is there surplus or shortage in the market at price Rs.40? At price…arrow_forward
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