Question

d. The quantity of tickets sold declines and the price of tickets may seem s 11. Suppose that the current price of a tablet device is $300 and that people are buying 1 million per year. The government decides to begin subsidizing the purchase of new tablet devices. The government believes that the appropriate price is $260 per tablet, so the program offers to send people cash for the difference between $260 and whatever the people pay for each tablet they buy. If no consumers change their tablet-buying behavior, how much will this program cost the taxpayers? A. $40 million B. SG0 million C. $260 million D. None of the above 12. If the equilibrium price for an apartment in a city is $1,000, but the government passes a law prohibiting landlords from charging more than $800. This is an example of a a market demand curve b. production possibilities curve c. price floor d. price ceiling 13. Suppose that a state government decides to offer a $50 subsidy to all people who, according to their physicians, should have their own blood pressure monitoring devices. Prior to this governmental decision, the private market clearing price of blood pressure monitors in this state was $50, and the equilibrium quantity purchased was 20,000 per year. After the goverment expands its plan, people in this state desire to purchase 40,000 devices each year. Manufacturers of blood pressure monitors are willing to provide 40,000 devices at a price of S60 per device. What out-of-pocket price does each consumer pay for a blood pressure monitor? 510 Cone d. 550 14. Usine the same scenario as above question 13 what percentage of total expenditures on blog

Answer 1

Answer:

11. A. 40 million

Explanation: Difference between the subsidized amount and price = 300 - 260 = $40

This is the amount sent back to consumers.

Consumers buy 1 million units per year at $300 each (their tablet- buying habits don't change).

So the total refunded amount will be: 40 * 1 million = $40 million

12. d. price ceiling

Explanation: Price ceiling is a price controlling mechanism where the government feels the existing price level is too high and sets a price limit on the highest level of price that can be charged for a commodity. The seller cannot charge anything above this price level. Price ceiling is normally below the existing price level.

In the example above, the price level is $1,000. The government has set the price ceiling level at $800. So it becomes an example of price ceiling.

13. b. $10

Explanation: The price has increased to $60. The government subsidy is $50. Therefore the balance ($60 - $50 = $10) is the amount the consumers have to pay out of their pockets.