Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 5Q
To determine
The effect of an increase in
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Why doesn’t the change to equilibrium happen immediately when there is surplus in the market?
When the price is above the equilibrium, how do market forces move the market price to
equilibrium.
When price is above the equilibrium, there will be more sellers than buyers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to raise prices.
When price is above the equilibrium, there will be more sellers than buyers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to lower prices.
The government directs companies to lower their price to clear unused inventory
When price is above the equilibrium, there will be more buyers than sellers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to maintain their prices and wait.
Suppose that, as part of an international trade agreement, the U.S. government reduces the tariff on imported coffee. Will this affect the supply or the demand for coffee? Why?
Chapter 7 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
Knowledge Booster
Similar questions
- Hello, I only need the answer to the last question that is in BOLD. A market consists of groups of buyers and sellers of a good or service. Market equilibrium represents the price at which the quantity of goods supplied is balanced with the number of goods consumers are willing and able to buy. Consider the market for coffee: Assume first that there is a heatwave that damages a large portion of coffee beans. Describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Next, assume there is a new study that finds enormous health benefits to coffee consumption. Again, describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Now, extend your analysis to what might happen if both of these events (weather which damages coffee beans…arrow_forwardHow does a market reach equilibrium without any outside intervention? Explain using the supply and demand concept.arrow_forwardSuppose you are asked to do a market analysis in an area in which a natural disaster has recently occurred. (An example might be Nashville after the spring floods or New Orleans after Hurricane Katrina.) Other than building supplies (which is too easy :), choose a market for a good or service that will be affected. Will demand or supply be affected? (Even if it might be both, just choose one or the other to keep it simpler). What happens to equilibrium prices and output in this market? Draw a supply and demand graph for your own use, and then explain the process in detail. Choose a market that has not already been chosen by a classmate. Be creative and thoughtful!arrow_forward
- Consumer and Producer Surplus Work It Out: Question 2 of 3 The accompanying diagram shows the demand and supply curves for taxi rides in New York City. Uber's entry into the market reduces the quantity of rides demanded from taxis at every price. On the accompanying graph, shift the demand curve to accurately represent the change in demand. Then, move point E₁ to the new equilibrium point. The unlabeled point is to help you answer the next question and is not movable. Assume that New York City politicians respond by imposing a regulated price of $2.50 per mile. Calculate consumer surplus, producer surplus, and total surplus for the taxi market after Uber has entered the market. Consumer surplus: $ Producer surplus: $ Total surplus: $ million million million Price ($ per mile) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 0 1.83 1.30 Market for Taxi Rides in NYC 120 240.00 400.00 D 240 360 480 600 720 840 960 1,080 1,200 Quantity of taxi rides (millions of miles)arrow_forwardConsumer and Producer Surplus Work It Out: Question 2 of 3 The accompanying diagram shows the demand and supply curves for taxi rides in New York City. Uber's entry into the market reduces the quantity of rides demanded from taxis at every price. On the accompanying graph, shift the demand curve to accurately represent the change in demand. Then, move point E₁ to the new equilibrium point. The unlabeled point is to help you answer the next question and is not movable. Assume that New York City politicians respond by imposing a regulated price of $2.50 per mile. Calculate consumer surplus, producer surplus, and total surplus for the taxi market after Uber has entered the market. Consumer surplus: $ Producer surplus: $ Total surplus: $ million million million Price ($ per mile) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 0 2.50 1.30 Market for Taxi Rides in NYC E D 600.00 S 240.00 120 240 360 480 600 720 840 960 1,080 1,200 Quantity of taxi rides (millions of miles)arrow_forwardRecently, the United States engaged in a trade war with China. It placed tariffs on goods from China. a) What is a tariff? b) How can tariffs affect trade between countries? How does it affect the price of goods? c) How could it affect consumption?arrow_forward
- The figure on the right displays the market for video game consoles, where nine buyers are interacting with nine sellers. According to this figure, the equilibrium price is $, and at that price, the equilibrium quantity is When the market is in equilibrium, social surplus is $. If the number of consoles is restricted to two less than the equilibrium quantity, social surplus is $. Alternatively, if the government mandated that one more video game console than equilibrium be transacted, social surplus is now $. From this analysis, it can be concluded that a market in competitive equilibrium social surplus. ៖ 900+ 800- 700- 600- 500- 400- 300- 200- 100- 0 Market for Video Game Consoles Quantity 6 7arrow_forwardDescribe how equilibrium is found. Describe how a shift of the demand or supply curve can effect equilibrium.arrow_forwardOn the market for cherries, supply is inelastic, while demand is elastic. You know that suppliers are not ready to supply any cherries when the price is below $1.5 per pound. a) On a graph, show the equilibrium price and the equilibrium quantity. Make sure you label the axes and the curves. Then, show the consumer surplus and the producer surplus. b) Strawberries and cherries are substitutes. The price of strawberries increased. On a graph,show what will happen on the market for cherries. Show the change in the consumer surplus. Show the change in the producer surplus. c) Forget about part (b). There are issues with the supply chain: transportation companies raise the fees they charge to deliver cherries from the farms to the supermarkets. On a graph, show what will happen on the market for cherries. Show the change in the consumer surplus. Show the change in the producer surplusarrow_forward
- Suppose the demand for calendars increases in November. At the same time, the price of the ink used in the production of calendars increases. In the market for calendars, if the size of the shift of the demand curve is larger than the size of the shift of the supply curve, then the equilibrium quantity rises.” Is this correct or not? Why?arrow_forwardYou are given the following market data for Venus automobiles in Saturnia. Demand: P = 35,000 - 0.5Q Supply: P = 8,000 + 0.25Q where P = Price and Q = Quantity. a. b. C. Calculate the equilibrium price and quantity. Calculate the consumer surplus in this market. Calculate the producer surplus in this market. Use the editor to format your answerarrow_forwardAnalyze the effects of changes in demand and supply on market equilibrium.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning