Macroeconomics
11th Edition
ISBN: 9781260506891
Author: Colander
Publisher: MCG
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Question
Chapter 5, Problem 9IP
(a)
To determine
Impact of removing the subsidy and designation.
(b)
To determine
The reason for the existence of the program for a longer period.
(c)
To determine
Tax for higher price of wool law.
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The government decides to place a £25 per unit-subsidy on the sales of books.
The initial demand and supply curves for books in this country are
respectively:
Qd = 1000 – 2*P and Qs = 3*P + 500 where price in measured in Great British
Pounds per book.
a) What is the pre-subsidy equilibrium price and equilibrium quantity of
books? Illustrate demand and supply curves and the market equilibrium
in a diagram indicating the respective intercepts. What are Consumer
and Producer Surplus in this market?
b) How many books will be traded once the £25 subsidy is enacted? How
much will consumers pay per book? Illustrate the effects of the subsidy
on the equilibrium quantity and price of books in a diagram (you can use
the diagram drawn in part a)). What are Consumer and Producer
Surplus in this market with the subsidy in place
c) What is the change in consumer and producer surplus following the
introduction of this subsidy? Calculate the monetary value of these
changes and identify the respective…
Consider the following supply and demand curves:
Demand: Price = 50-3.5*Qd
Supply Price = 20+.5*Qs
Suppose now a 20 dollar subsidy was placed on consumers. Given this information, find the dead weight loss created by the subsidy
Suppose that the demand for sugar is given by P=27-20d and the supply is given by
P=2+3Qs. The government decided to give a subsidy of $5 per unit to suppliers. This
decision of the government will lead to a price received by suppliers to
Chapter 5 Solutions
Macroeconomics
Ch. 5.1 - Prob. 1QCh. 5.1 - Prob. 2QCh. 5.1 - Prob. 3QCh. 5.1 - Prob. 4QCh. 5.1 - Prob. 5QCh. 5.1 - Prob. 6QCh. 5.1 - Prob. 7QCh. 5.1 - Prob. 8QCh. 5.1 - Prob. 9QCh. 5.1 - Prob. 10Q
Ch. 5.A - Prob. 1QECh. 5.A - Prob. 2QECh. 5.A - Prob. 3QECh. 5.A - Prob. 4QECh. 5.A - Prob. 5QECh. 5.A - Prob. 6QECh. 5.A - Prob. 7QECh. 5.A - Prob. 8QECh. 5.A - Prob. 9QECh. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - Prob. 3QECh. 5 - Prob. 4QECh. 5 - Prob. 5QECh. 5 - Prob. 6QECh. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QECh. 5 - Prob. 11QECh. 5 - Prob. 12QECh. 5 - Prob. 13QECh. 5 - Prob. 14QECh. 5 - Prob. 15QECh. 5 - Prob. 16QECh. 5 - Prob. 17QECh. 5 - Prob. 1QAPCh. 5 - Prob. 2QAPCh. 5 - Prob. 3QAPCh. 5 - Prob. 4QAPCh. 5 - Prob. 5QAPCh. 5 - Prob. 1IPCh. 5 - Prob. 2IPCh. 5 - Prob. 3IPCh. 5 - Prob. 4IPCh. 5 - Prob. 5IPCh. 5 - Prob. 6IPCh. 5 - Prob. 7IPCh. 5 - Prob. 8IPCh. 5 - Prob. 9IPCh. 5 - Prob. 10IPCh. 5 - Prob. 11IPCh. 5 - Prob. 12IPCh. 5 - Prob. 13IPCh. 5 - Prob. 14IP
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