Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 6, Problem 16APA
a)
To determine
The reason for a subsidy.
b)
To determine
The effect of subsidy on price and marginal cost.
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Price(per pound)
Quantity Supplied(pounds)
Quantity Demanded(pounds)
$7
80
30
$6
70
45
$5
60
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$4
50
75
$3
40
90
$2
30
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$1
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The equilibrium price is $ per pound.
Suppose that after a successful lobbying campaign by chocolate producers, the government imposes a price floor of $7 per pound. The price floor will lead to a surplus of pounds of chocolate.
After a few years, chocolate producers are not happy. They realize that compared to the market equilibrium, their total revenue has fallen by $ .
To compensate the chocolate producers, the government agrees to buy the entire surplus chocolate at the $7 price floor. Chocolate producers rejoice. Compared to the market equilibrium, their total revenue has now increased by $ .
Canada's dairy industry is a rich, closed club
If you want to be a dairy farmer, you buy a plot of land and some cows and start to
sell your milk. Not in Canada. There, farmers must buy a quota to produce a set
amount of milk. The situation is similar in the markets for chicken and eggs.
Source: The Globe and Mail, June 25, 2015
Draw a graph to illustrate the Canadian market for milk.
With a production quota, show the quantity of milk produced, the price, consumer
surplus, producer surplus, and the deadweight loss created.
The graph shows the demand curve and supply curve in the Canadian milk market.
Draw a line to indicate the production quota if the production quota is 250 million
gallons a year. Label it.
Draw a point to show the quantity produced and the price paid by consumers.
Draw shapes to show the consumer surplus, the producer surplus, and the
deadweight loss created. Label them.
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Canada's dairy industry is a rich, closed club
If you want to be a dairy farmer, you buy a plot of land and some cows and start to
sell your milk. Not in Canada. There, farmers must buy a quota to produce a set
amount of milk. The situation is similar in the markets for chicken and eggs.
Source: The Globe and Mail, June 25, 2015
Draw a graph to illustrate the Canadian market for milk.
With a production quota, show the quantity of milk produced, the price, consumer
surplus, producer surplus, and the deadweight loss created.
The graph shows the demand curve and supply curve in the Canadian milk market.
Draw a line to indicate the production quota if the production quota is 250 million
gallons a year. Label it.
Draw a point to show the quantity produced and the price paid by consumers.
Draw shapes to show the consumer surplus, the producer surplus, and the
deadweight loss created. Label them.
3
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C
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Chapter 6 Solutions
Macroeconomics
Ch. 6.1 - Prob. 1RQCh. 6.1 - Prob. 2RQCh. 6.1 - Prob. 3RQCh. 6.1 - Prob. 4RQCh. 6.2 - Prob. 1RQCh. 6.2 - Prob. 2RQCh. 6.2 - Prob. 3RQCh. 6.2 - Prob. 4RQCh. 6.2 - Prob. 5RQCh. 6.3 - Prob. 1RQ
Ch. 6.3 - Prob. 2RQCh. 6.3 - Prob. 3RQCh. 6.3 - Prob. 4RQCh. 6.3 - Prob. 5RQCh. 6.4 - Prob. 1RQCh. 6.4 - Prob. 2RQCh. 6.4 - Prob. 3RQCh. 6.4 - Prob. 4RQCh. 6.4 - Prob. 5RQCh. 6.5 - Prob. 1RQCh. 6.5 - Prob. 2RQCh. 6.5 - Prob. 3RQCh. 6.5 - Prob. 4RQCh. 6 - Prob. 1SPACh. 6 - Prob. 2SPACh. 6 - Prob. 3SPACh. 6 - Prob. 4SPACh. 6 - Taxes (Study Plan 6.3) 5. The table in the next...Ch. 6 - Prob. 6SPACh. 6 - Prob. 7SPACh. 6 - Prob. 8SPACh. 6 - Prob. 9APACh. 6 - Prob. 10APACh. 6 - Prob. 11APACh. 6 - Prob. 12APACh. 6 - Prob. 13APACh. 6 - Prob. 14APACh. 6 - Prob. 15APACh. 6 - Prob. 16APACh. 6 - Prob. 17APACh. 6 - Prob. 18APACh. 6 - Prob. 19APACh. 6 - Prob. 20APACh. 6 - Prob. 21APACh. 6 - Prob. 22APACh. 6 - Prob. 23APA
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