Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 6, Problem 8P
To determine
The
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Question 3
Suppose the demand for a product is given by Q-100-5P, where Qp is quantity per year measured in kilogram
and P is the price in AUD per kilogram. The supply curve for this product is given by Qs=4P-8. Answer the
following questions and provide a graph illustration.
a) Determine the equilibrium price?
b) Calculate the elasticity of demand and supply at the equilibrium price.
c) Determine the consumer surplus and producer surplus at the equilibrium price?
d)
Suppose that the government imposes a floor price of A$15 and promises to buy any surplus (e.g., Q³-
QD) on the market. Determine the new consumer surplus, the new producer surplus, and the
government expenditure of this policy
e) Instead of using the floor price, now the government imposes a A$3 tax on each kg sold, determine the
market price after having this tax policy.
f) Calculate the consumer surplus, producer surplus and tax revenue.
g)
Using the concepts of demand and supply elasticity, predict which party, the…
6) The quantity demanded of a certain brand of smart phone is 2000 per week when the unit price is $84. For each decrease in the unit price $5 below $84, the quantity demanded increases by 50 units. The supplier will not market any of the smartphones if the unit price is $60 or less, but the supplier will market 1800 per week if the unit price is $90. The supply and demand equations are known to be lineara) Find the demand and supply equationsb) Find the equilibrium quantity and price
Question 4
Suppose there is a decrease in supply in a market where the supply curve slopes upwards
and the demand curve slopes downwards. Which of the following would not occur?
a) An excess supply.
b) A fall in price.
c) A fall in supply.
d) A fall in the equilibrium level of expenditure.
Question 5
Suppose a market is in equilibrium, and then the demand increases. Which of the following
would be shown on a graph that illustrated the effects?
a) An excess demand at the initial equilibrium price.
b) An excess demand at the new equilibrium price.
c) An excess supply at the initial equilibrium price.
d) An excess supply at the new equilibrium price.
Chapter 6 Solutions
Econ Micro (book Only)
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- 6. Suppose that demand and supply of apples are described by the following equations: P = 100 - 3Q (demand) P = 20 + Q (supply) a) Calculate the equilibrium price and quantity. Illustrate. b) Suppose a $4 tax is placed on apples. What is the new equilibrium quantity? How much do consumers pay to get this quantity? How much do suppliers receive for selling this quantity? Show your results on a supply & demand diagram.arrow_forward9) MARKET EQUILIBRIUM Suppose the demand for a product is given by p = d(q) = -0.4q + 300 and the supply for the same product is given by p = s(q) = 0.2q. For both functions, q is the quantity and p is the price, in dollars. a. Find the equilibrium point. (i.e. the market demand quantity and the market price) b. Find the consumer surplus at the equilibrium price. c. Find the producer surplus at the equilibrium price.arrow_forwardQuestion Find the consumers' surplus at a price level of $8 for the price-demand equation p = D(x) = 40 – 0.4x where p is the price and x is the demand. Do not include a dollar sign or any commas in your answer.arrow_forward
- Pleasearrow_forwardConsider the market for wine in the diagram below: 70 Price ($) 60 50 40 30 20 10 S D 100 200 300 400 500 600 700 800 Wine (millions of bottles) $45 and 550 million bottles of wine $45 and 500 million bottles of wine $50 and 600 million bottles of wine $50 and 500 million bottles of wine Suppose supply shifts to the right by 100 million bottles of wine. What would be the new equilibrium price and quantity of wine as a result of this increase in supply?arrow_forwardConsider the demand for measuring tapes. The demand for measuring tapes is Qd 750 7p and the supply is Qs = 500 + 6p. Use the equations to develop a table with price, demand and supply, then draw the market graph. Use the graph to calculate the consumer's surplus.arrow_forward
- Find the consumers’ surplus and the producers’ surplus at the equilibriumprice level for the given price–demand and price–supply equations and draw the graph. (You may round all values to the nearest integer). p = D(x) = 185e-0.005x p = S(x) = 25e 0.005xarrow_forward10) 8. Use the following graph for the milk market to answer the question below. There would be excess supply (a surplus) of milk whenever the price is A) between $1.5 and $2.00 per gallon. B) lower than $1.50 per gallon. C) lower than $2.00 per gallon. D) higher than $1.50 per gallon. Price (per gallon) $2.00 $1.50 $1.00 0 3 G 20 27 28 30 35 Millions of Gallons of Milk per Weekarrow_forward3. Consumer surplus for a group of consumers The following graph plots the demand curve (blue line) for several consumers in the market for bluetooth speakers in Mead, a small town located in Colorado. The Mead market price of a bluetooth speaker is given by the horizontal black line at $35. Each rectangle you can place on the following graph corresponds to a particular buyer in this market: orange (square symbols) for Dmitri, green (triangle symbols) for Frances, purple (diamond symbols) for Jake, tan (dash symbols) for Latasha, and blue (circle symbols) for Nick. Use the rectangles to shade the areas representing consumer surplus for each person who is willing and able to purchase a bluetooth speaker at a market price of $35. (Note: If a person will not purchase a bluetooth speaker at the market price, indicate this by leaving his or her rectangle in its original position on the palette.) PRICE (Dollars per bluetooth speaker) 5 80 S 70 60 50 40 30 20 5 10 0 0 1 Dmitri 2 Frances 3…arrow_forward
- Two months ago, on July 1, 2019, the State of Illinois raised gasoline taxes by $.19 (19 cents) per gallon of gas. Graphically depict the market for Illinois gasoline prior to the July 2019 increase in gasoline tax. Clearly indicate equilibrium Q and P on the graph. (Only a graph is needed for this question)arrow_forwardConsider the supply and demand curves for taxi rides in the attached graph. If the price is $2.50 then consumers enjoy a surplus of______million dollars.arrow_forward• You are given a task for analysis the market for Sport Bike. You found that when the market price of bike is $500 the market demand is 9,200 bikes, whereas the market supply is 6,000 bikes. Yet, when the price rises to $650 the market demand is 6,800 bikes but the market supply is 8,000 bikes. Your tasks are: a) Define the equations of market demand and market supply for bike. b) Find the equilibrium-price and equilibrium– quantity and draw a graph to show this market. c) Estimate the consumers' surplus, producers' surplus and bike market's surplus.arrow_forward
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