Question

37. The following figure illustrates the demand and supply curves for a good in a competitive market.




Refer to the figure above. What is the equilibrium price of this good?

a. $8

b. $7

c. $5

d. $3.50

38. The following figure illustrates the demand and supply curves for a good in a competitive market.




Refer to the figure above. Suppose a price ceiling of $3.50 is imposed on this market. What would be a consequence of this price control policy?

a. A shortage of 8 units

b. A surplus of 4 units

c. A shortage of 7 units.

d. A shortage of 4 units

39. The following figure illustrates the demand and supply curves for a good in a competitive market.




Refer to the figure above. Suppose a price ceiling of $3.50 is imposed on this market. Which areas on the graph represent the deadweight loss in this market due to this price policy?

a. C + D

b. A + B + C + D + E + H

c. F + G

d. A + B + C + D + E + H + F + G

40. The following figure illustrates the demand and supply curves for a good in a competitive market.




Refer to the figure above. Suppose a price floor of $7 is imposed on this market. Area(s) ________ on the graph represent the consumer surplus, and area(s) ________ represent the producer surplus in this market after this price policy.

a. A + E; B + H

b. E; A + B + H

c. A + B + E; H

d. A + C + E; B + D + H

Answer 1

37.The equilibrium price of a good is determined at the intersection of the supply and demand curve.The equilibrium price is thus,$5.

Answer-C

38.If the market ceiling is set at $3.5,then the quantity demanded is 12 units and quantity supplied is 4 units.Shortage=12-4=8 units.

Answer-A

39.Deadweight loss=C+D

Answer-A

40.Consumer surplus at P=7 is E and Producer surplus=A+B+H

Answer-B