Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 4, Problem 7Q
To determine
Distinguish between
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Microeconomics (2nd Edition) (Pearson Series in Economics)
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- what is steve total willingness to pay for five bags?arrow_forwardThe supply curve of some good is vertical. What will be the effects of a fall in demand for it? explain When two people exchange a good for money, we know that they both benefit. If so, why are economists generally uninterested in which of these people receives more of the gains from the exchange? explainarrow_forwardRecently, the United States engaged in a trade war with China. It placed tariffs on goods from China. a) What is a tariff? b) How can tariffs affect trade between countries? How does it affect the price of goods? c) How could it affect consumption?arrow_forward
- If the price of X decreases and this decreases the demand for Y, thenarrow_forwardSven makes rocking chairs for a cost of $75 each, and he sells the rocking chairs for a market price of $130 each. Deidre is willing to pay $200 for a rocking chair. However, the government believes that rocking chair manufacturers should receive more money, and set the lowest legal price rocking chairs can be sold for at $250. At the market price, Sven is willing to sell a rocking chair to Deidre, and Deidre is willing to buy a rocking chair from Sven. Unfortunately, with the new legal minimum, Sven and Deidre cannot trade with one another, and miss out on additional gains from trade. Which of the effects of a price control best fits the scenario above? O Deadweight Loss Reduction in Quality O Misallocation of Resources Wasteful Increase in Qualityarrow_forwardSven makes rocking chairs for a cost of $75 each, and he sells the rocking chairs for a market price of $130 each. Deidre is willing to pay $200 for a rocking chair. However, the government believes that rocking chair manufacturers should receive more money, and set the lowest legal price rocking chairs can be sold for at $250. At the market price, Sven is willing to sell a rocking chair to Deidre, and Deidre is willing to buy a rocking chair from Sven. Unfortunately, with the new legal minimum, Sven and Deidre cannot trade with one another, and miss out on additional gains from trade. Which of the effects of a price control best fits the scenario above? A)Deadweight Loss B) Reduction in Quality C) misallocation of resources D)wasteful increase in Quanityarrow_forward
- When the price is above the equilibrium, how do market forces move the market price to equilibrium. When price is above the equilibrium, there will be more sellers than buyers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to raise prices. When price is above the equilibrium, there will be more sellers than buyers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to lower prices. The government directs companies to lower their price to clear unused inventory When price is above the equilibrium, there will be more buyers than sellers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to maintain their prices and wait.arrow_forwardIn the market for organs for transplant-such as kidneys, lungs and hearts-the price is fixed at zero. Legal restrictions prevent any payment for donation of organs. Reliance on altruism-donation without payment-has not filled the demand for organs. The number of people on transplant waiting lists (and people dying while on those lists) is twice the number of willing donors. Draw a graph illustrating the effect of setting the price for organs= zero. What happens to consumer and producer surplus at price=zero vs. at a "free-market" price?arrow_forwardWhat might a producer do if consumers stopped purchasing their goods? Provide an example of this occurrencearrow_forward
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