Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 6, Problem 19APA
To determine
The effect of a subsidy on price and quantity.
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Macmillan Learning
Consider the following supply and demand diagram. In this market, the government subsidizes the production of this good, and
the subsidy wedge is indicated.
Price
$10
9
co
7
6
5
4
3
2
1
0
Demand
10 20 30 40 50
Supply
Subsidy
60 70 80 90
100
Quantity
a. Without the subsidy, what are the total gains from trade?
The graph shows the market for college education.
To encourage the efficient number of students to enroll
colleges receive a subsidy.
Draw the new supply curve following introduction of the
subsidy. Label it.
A subsidy is a payment that_ to cover part of the costs
of education.
O A. students make to the teachers
B. the government makes to colleges
C. students make to the colleges
D. colleges make to students
60-
50-
40-
30-
20-
10-
0-
Price and cost (thousands of dollars per student per yea
0
S=MC
MSB
D=MB
2
10
Quantity (thousands of students per year)
>>> Draw only the objects specified in the question.
12
The graph shows the supply curve of smart watches and the market price of a smart watch.
Draw the producer surplus from smart watches. Label it.
What is producer surplus?
Producer surplus is
OA. equal to the value that the seller places on the good, summed over the quantity
sold
OB. received by a producer when price exceeds the marginal cost of production
OC. the value of the good minus its marginal cost, summed over the quantity sold
D. the marginal benefit received by a producer, summed over all the units sold
500+
400-
300-
200-
100+
0-
Price (dollars per smart watch)
S-MG
0
Market
price
1
4
5
6
2
3
Quantity (millions of smart watches per year)
>>> Draw only the objects specified in the question.
Q
7
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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