Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 3DQ
To determine
The difference between the rent seeking and the profit maximization.
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Consider that the market demand for a textbook is given by P = 100 - 20 land the market supply is given by P = 10 + Q. Suppose a price
ceiling of $20 is imposed. What is the deadweight loss?
O 300
O 450
O 600
O 150
Suppose that the demand and supply functions for a good are given as follows:
Demand: 0 = 600-5P
Supply: 0
Suppose now that government imposes $27 tax per unit of output on sellers. What is the burden on sellers?
=-300+4P
O 27
12
15
Question 5:
Combined state and federal taxes on gasoline average around 50 cents per gallon, and these taxes are statutorily levied on gasoline sellers. Because
the demand for gasoline is relatively inelastic compared to the supply of gasoline:
buyers likely do not bear much of the actual burden because it is statutorily levied on sellers who must submit the tax payments.
sellers likely bear most of the actual burden of the tax through lower gasoline prices.
O the net price received by sellers after they pay taxes likely falls by almost the full amount of the tax.
O buyers likely bear most of the actual burden of the tax through higher gasoline prices.
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- Suppose that the demand and supply functions for a good are given as follows: Demand: O600-SP Supply: O= 300+4P Suppose now that government imposes $2 tax perunit of output on sellers. What is the burden on buyers 12 27 15arrow_forwardFigure 9.2, U.S. Labor Market Figure 9.2 represents the U.S. labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by S, and consists entirely of native U.S. workers. The demand schedule of labor is denoted by Do Hourly Wage/S O O 18 Select one: O 12 O 9 So 2 Consider Figure 9.2. Policies that permit Mexican workers to freely migrate to the United States would likely be resisted by: S₁ a. U.S. capital owners b. Native U.S. workers 3 Do 6 Quantity of Labor c. U.S. capital owners and native U.S. workers d. Neither U.S. capital owners or native U.S. workersarrow_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
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