Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Chapter 4, Problem 5DQ
To determine
The impact of subsidy and tax spill over effect.
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Suppose that the market is initially at an equilibrium price of $6 and an
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Price per bin
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Bins of peaches
Suppose the figure represents the market for peaches and there are no externalities in the market. Suppose a sales tax of $40 per bin of peaches is levied on
consumers of peaches. The new demand curve is labeled D2. Consumer surplus after the tax is:
O $1000
D1
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O $100
The graph shows the marginal social cost, supply, and demand curves in the hand sanitizer market. At what quantity could
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Chapter 4 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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- Refer to the above supply and demand graph of Product X. Q, Quantity of Product X What would happen if the government taxed the producers of this product because it has negative externalities in production? O 1) Supply would increase. 2) Demand would decrease. O 3) Price would decrease. 4) Supply would decrease. Pricearrow_forwardRefer to Figure 11-1. If the external cost of producing the good is not taken into account, what is the deadweight loss in the market? Figure 11-1. Price O O 8 7 5 0 $2 $4 $5 $10 $15 8 10 15 17 O C2 C1 Quantityarrow_forwardImagine that the demand curve for beer is given by P=9-Q and supply for beer is given by P=1+Q. What is the deadweight loss associated with a tax of $3 per unit? 12 O 2.25 O None of the above. O 6.25arrow_forward
- Suppose the equation for the demand curve in a market is P=100 – 2Q. Also, suppose the equation for the supply curve in the same market is P=10+3Q. Suppose there is an external cost of $20 associated with the production of each unit of the good. The socially optimal quantity is O 4 units smaller than the market equilibrium quantity. O 22 units greater than the market equilibrium quantity O 14 units smaller than the market equilibrium quantity O 4 units greater than the market equilibrium quantity.arrow_forward10:17 OT 1. A college student enjoys eating pizza. Her willingness to pay for each slice is shown in the following table: Number of pizza slices 7 1 2 3 4 5 6 7 Willingness to pay (per slice) $6 + LO 5 4 3 2 1 b. If the price of slices falls to $2, how much consumer surplus will she enjoy? O 3arrow_forwardSuppose that the government wishes to encourage the manufactureand sale of small cars. The current supply and demand of small carsare: Qs = −(10/9) + (1/9)P; Qd = 100 − P, where Q is in millions ofcars and P is in hundreds of dollars.Now, suppose that the government is considering two alternative plansfor encouraging small car sales. Under Plan A, every car manufacturerwill receive a $500 rebate from the government for each car sold. Underplan B, every purchaser of a small car will receive a $500 rebate fromthe government.Which of the plan is more effective in encouraging sales? Show bycomputing the equilibrium quantity under each plan.arrow_forward
- 20 18 S 16 14 12 10 8 Page 1 D 6. 4 2 0 1 2 3 4 5 6 7 8 9. 10 11 12 Quantity Suppose that supply and demand at a market are represented by curves S and D at the figure above (notice that the vertical axis grid has increments of $2) and then a tax of $6 dollars per unit is imposed on buyers. Which curve shifts as a result? O Demand curve is shifting up by $6. Supply curve is shifting down by $6. Supply curve is shifting up by $6. Demand curve is shifting down by $6. Pricearrow_forwardEconomic efficiency is O A. a market outcome in which the marginal benefit to consumers of the last unit produced is greater than its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum. O B. a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum. O C. a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is not at a maximum. O D. a government outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.arrow_forwardThe accompanying diagram shows the supply and demand diagrams for the competitive market for honey in one region. MC represents private marginal cost and MB represents private marginal benefit. Assume there are two types of firms in this region-beekeepers that produce honey and orchard keepers that produce peaches. The bees provide a benefit to the orchard keepers by pollinating their peach trees. If the external marginal benefit is $2 per unit of honey, then what is the allocatively efficient output? O A. 20 kg B. 80 kg C. 40 kg D. 100 kg E. 60 kg C Price ($ per kg) 12 11 10 8 20 MC2 MB 40 :60 :80 S=MCO MC₁ MB₂ D=MBO 100 Quantity (kg of honey per month)arrow_forward
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