Suppose the gasoline market is competitive and that the government grants a subsidy to the industry...
Suppose the gasoline market is competitive and that the government grants a subsidy to the industry of 20 cents per gallon. Demonstrate and explain how the subsidy will affect price, output, and consumer and producer surplus. Show the dead-weight (or social) loss from the subsidy.
Homework Answers
Ans) When government gives subsidy, it reduces the price paid by the buyer and increase the price received by the sellers. As a result, it increases consumer surplus and producer surplus.
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Suppose the gasoline market is competitive and that the
government grants a subsidy to the industry...
Question 1 Suppose the government introduces a subsidy of $5 (paid to producers) per unit into...
Question 1 Suppose the government introduces a subsidy of $5 (paid to producers) per unit into a market. a) If the government's goal is to help producers, will the subsidy be more or less effective in the short run when the demand curve is relatively elastic? (explain) (6%) b) What is the effect of the subsidy on the equilibrium price, quantity, consumer surplus, and producer surplus in the long run in a constant cost industry? (6%) c) How does the...
wanna check final answer I already did it Taxation Suppose now the government decides to intervene the market with...
wanna check final answer I already did it
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The market supply in a competitive industry is p = Q and demand is p =...
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Consider an industry that is competitive with N firms and has the following market demand and...
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Suppose that the demand curve for wheat is Qd= 400-10p Qs= 10p The government provides producers with a specific subsidy...
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Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00...
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(1 point) The graph below shows the demand and supply for gasoline, Suppose the government imposes...
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Assumes Qd = 1000 – 10P Qs = 10P If a 20$ subsidy is placed on...
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Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon.
The language of price controls Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or nonbinding. The government prohibits gas stations from selling gasoline for more than $3.40 per gallon. There are many teenagers who would like to work at gas stations, but they are not hired due...
Question 1 Suppose the government introduces a subsidy of $5 (paid to producers) per unit into a market. a) If the government's goal is to help producers, will the subsidy be more or less effective in the short run when the demand curve is relatively elastic? (explain) (6%) b) What is the effect of the subsidy on the equilibrium price, quantity, consumer surplus, and producer surplus in the long run in a constant cost industry? (6%) c) How does the...
wanna check final answer I already did it
Taxation Suppose now the government decides to intervene the market with a tax on producers of $4, determine the price for the consumer, the g. price for the producer, and the quantity produced with the tax Draw a graph (Diagram 4) representing the market for Hallowcen costurmes with a tax on producers of $4. Accurately label and show the h. area for consumers (CS), producer surplus (PS), deadweight loss (DWL), and government...
Consider an industry that is competitive with N firms and has the following market demand and supply. To start with, suppose there is no other relevant fact or issue at play. Thus, the market D and S looks as in this graph, Figure 1. a) Depict such a graph on your paper and indicate the following: Market price and output, the socially optimal output, the size of consumer surplus, and the size of producer surplus. b) Now, suppose that overnight...
Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or nonbinding. Statement Price Control Binding or Not The government prohibits gas stations from selling gasoline for more than $2.80 per gallon. Due to new regulations, gas stations that would like to pay better wages...
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