1.) The following relations describe monthly demand and supply for a wheat
where P is the price (in cents) per pound and Q is the quantity (in millions) of pounds.
Suppose government passes a regulation which makes it illegal for buyers to buy at a price lower than 60 cents per pound.
a.) Calculate the value of consumer surplus post-regulation. Compare it with pre-regulation consumer surplus.
b.) Calculate the value of producer surplus post-regulation. Compare it with pre-regulation producer surplus.
c.) Identify other undesirable effects of this regulation.
Homework Answers
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1.) The following relations describe monthly demand and supply
for a wheat
where P is the...
1.) The following relations describe monthly demand and supply for a wheat where P is the...
1.) The following relations describe monthly demand and supply
for a wheat
where P is the price (in cents) per pound and Q is the quantity
(in millions) of pounds.
Suppose government passes a regulation which makes it illegal
for buyers to buy at a price lower than 60 cents per pound.
a.) What is the prevailing price and quantity traded after the
regulation?
b.) Does the price floor create any surplus or shortage in
market? Why or why not?...
1.) Consider the market for wheat as given in Question 1 above. Suppose government passes a...
1.)
Consider the market for wheat as given in Question 1 above.
Suppose government passes a regulation which makes it illegal for
sellers to sell at a price higher than 30 cents per pound.
a.) What is total market surplus post-regulation? Compare it
with pre-regulation market surplus.
b.) Calculate the deadweight loss created by the regulation.
c.) Calculate the value of consumer surplus post-regulation.
Compare it with pre-regulation consumer surplus.
d.) Calculate the value of producer surplus post-regulation.
Compare it...
6. Demand, Supply, consumer surplus and Market Equilibrium. The following relations describe monthly demand and supply...
6. Demand, Supply, consumer surplus and Market Equilibrium. The following relations describe monthly demand and supply conditions in the metropolitan area for recyclable aluminum QD = 317,500 - 10,000P (Demand) Qs = -2,500 + 10,000P (Supply) where Q is quantity measured in pounds of scrap aluminum and P is price in dollars. Complete the following table: A Calculate the market equilibrium price and output? B. What is the inverse demand curve P = f(QD)? C. Compute the consumer surplus at...
The inverse demand and supply curves for wheat are given by: P= 11-Q^d and P=1 +...
The inverse demand and supply curves for wheat are given by: P= 11-Q^d and P=1 + Q^s, where P is the price of wheat in dollars per bushel (USD/bu) and Q is the quantity of wheat in million bushels (mil bu), The price support set by the government is equal to $8/bu. Calculate the changes in producer and consumer surplus for the price support policy. Who is made better off, who worse off, and by how much?
The wheat market is perfectly competitive, and the market supply and demand curves are given by the following equations:
The wheat market is perfectly competitive, and the market supply and demand curves are given by the following equations: QD = 20,000,000 - 4,000,000P QS = 7,000,000 + 2,500,000P, where QD and QS are quantity demanded and quantity supplied measured in bushels, and P = price per bushel. a. Determine consumer surplus at the equilibrium price and quantity. b. Assume that the government has imposed a price floor at $2.25 per bushel and agrees to buy any resulting excess supply. How many bushels of wheat...
1 Suppose the demand for shoes is given by: QD= 210 -2P. The supply of shoes...
1 Suppose the demand for shoes is given by: QD= 210 -2P. The supply of shoes is given by: QS= 9P -120. Calculate the Gains from Trade (also known as Economic Surplus) that would exist in this market in a competitive equilibrium. 2 Suppose the demand for jackets was given by: QD= 140 -0.4P. The supply of jackets is given by: QS= 4P -80. Suppose the price was $49 per jacket. Calculate whether there is a surplus or shortage of...
The supply and demand for broccoli are described by the following equations:
The supply and demand for broccoli are described by the following equations:Qs=4P-80 Qd=100-2Pwhere Q is the quantity of broccoli and P is its price.(a) Graph the supply curve and the demand curve.(b) What is equilibrium price and quantity?(c) Calculate consumer surplus, producer surplus, and total surplus at the equilibrium. Indicate consumer surplus and producer surplus on your diagram.(d) Suppose a dictator who hated broccoli was to tax the sellers of the vegetable. Explain what determines who bears the largest burden -...
Question 9 1 pts Below are old and new (inverse) demand and supply curves for eggs...
Question 9 1 pts Below are old and new (inverse) demand and supply curves for eggs before (old) and after (new) a food safety inspection regulation is added. OLD Supply: P = 20 +4Q and Demand: 100-20 NEW Supply: P=40+4Q and Demand: 200-20 Prices are in cents per dozen (e.g. 100 cents = $1) and Quantities are in thousands of egg cartons (12 in each carton). The new regulation will cause.... Consumer surplus to decrease and producer surplus to increase....
The following graph shows the market for wheat in Canada, where Dc is the demand curve,...
The following graph shows the market for wheat in Canada, where Dc is the demand curve, Sc is the supply curve, and Pw is the free trade price of wheat. Assume that Canada is a relatively small producer of wheat, so changes in its output do not affect the world price of wheat. Also assume that Canada is currently open to free trade, and domestic consumers are able to purchase wheat at the world price with negligible transportation costs. Suppose...
The following graph shows the market for wheat in Canada, where Dc is the demand curve,...
The following graph shows the market for wheat in Canada, where Dc is the demand curve, Sc is the supply curve, and Pw is the free trade price of wheat. Assume that Canada is a relatively small producer of wheat, so changes in its output do not affect the world price of wheat. Also assume that Canada is currently open to free trade, and domestic consumers are able to purchase wheat at the world price with negligible transportation costs. Suppose...
1.) The following relations describe monthly demand and supply
for a wheat
where P is the price (in cents) per pound and Q is the quantity
(in millions) of pounds.
Suppose government passes a regulation which makes it illegal
for buyers to buy at a price lower than 60 cents per pound.
a.) What is the prevailing price and quantity traded after the
regulation?
b.) Does the price floor create any surplus or shortage in
market? Why or why not?...
1.)
Consider the market for wheat as given in Question 1 above.
Suppose government passes a regulation which makes it illegal for
sellers to sell at a price higher than 30 cents per pound.
a.) What is total market surplus post-regulation? Compare it
with pre-regulation market surplus.
b.) Calculate the deadweight loss created by the regulation.
c.) Calculate the value of consumer surplus post-regulation.
Compare it with pre-regulation consumer surplus.
d.) Calculate the value of producer surplus post-regulation.
Compare it...
6. Demand, Supply, consumer surplus and Market Equilibrium. The following relations describe monthly demand and supply conditions in the metropolitan area for recyclable aluminum QD = 317,500 - 10,000P (Demand) Qs = -2,500 + 10,000P (Supply) where Q is quantity measured in pounds of scrap aluminum and P is price in dollars. Complete the following table: A Calculate the market equilibrium price and output? B. What is the inverse demand curve P = f(QD)? C. Compute the consumer surplus at...
Question 9 1 pts Below are old and new (inverse) demand and supply curves for eggs before (old) and after (new) a food safety inspection regulation is added. OLD Supply: P = 20 +4Q and Demand: 100-20 NEW Supply: P=40+4Q and Demand: 200-20 Prices are in cents per dozen (e.g. 100 cents = $1) and Quantities are in thousands of egg cartons (12 in each carton). The new regulation will cause.... Consumer surplus to decrease and producer surplus to increase....
The following graph shows the market for wheat in Canada, where Dc is the demand curve, Sc is the supply curve, and Pw is the free trade price of wheat. Assume that Canada is a relatively small producer of wheat, so changes in its output do not affect the world price of wheat. Also assume that Canada is currently open to free trade, and domestic consumers are able to purchase wheat at the world price with negligible transportation costs. Suppose...
The following graph shows the market for wheat in Canada, where Dc is the demand curve, Sc is the supply curve, and Pw is the free trade price of wheat. Assume that Canada is a relatively small producer of wheat, so changes in its output do not affect the world price of wheat. Also assume that Canada is currently open to free trade, and domestic consumers are able to purchase wheat at the world price with negligible transportation costs. Suppose...
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