Compare a market operating at a quantity lower than equilibrium (ie. a price floor) with the...
Compare a market operating at a quantity lower than equilibrium (ie. a price floor) with the same market operating at the equilibrium quantity. Which of the following statements are true?
1. A price floor will increase the producer and total surplus.
2. It is unclear if the consumer surplus is greater or less at the market operating below equilibrium.
3. A market operating below equilibrium will transfer some producer surplus to consumers
4. A market operating below equilibrium will transfer some consumer surplus to producers.
Homework Answers
The answer is 4) A market operating below equilibrium will transfer some consumer surplus to producers.
A price floor is the lowest legal price a commodity can be sold
at. Price floors are used by the government to prevent prices from
being too low. The most common price floor is the minimum wage the
minimum price that can be paid for labor. Price floors are also
used often in agriculture to try to protect farmers.
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Compare a market operating at a quantity lower than equilibrium
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Refer to the table above. If the market is originally in equilibrium and a price ceiling...
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This assignment asks you to solve for equilibrium in a market and then look at the...
This assignment asks you to solve for equilibrium in a market and then look at the impact of a price ceiling, a price floor and a tax. The correct answers to these questions will vary across students. This is because the numerical values of some parameters are dependent on your student members. Suppose supply and demand for pizza are given by: Q" = 110 - OP QS = BP If the last digit of your student number is not 0,...
3. The market supply and demand for a product are shown in the diagram below. O...
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1. Suppose market demand for oranges is given by QD = 500 - 10P where Qp...
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l. 97. Assume a market that has an equilibrium price of S7. If the market price is set at $3, which of the llowing is true? Some surplus is transferred from consumers to producers, but total surplus falls. B. All surplus is transferred from consumers to producers, and total surplus stays the same. C. Some surplus is transferred from producers to consumers, but total surplus falls. D. Some surplus is transferred from consumers to producers, causing total surplus to increase....
If a $5 tax on each pack of cigarettes causes the market price of cigarettes to increase by $2.50 then which of the following statements is true? consumers must be more elastic than producers consumers must be less elastic than producers consumers and producers must be equally elastic Question 42 (1 point) If the elasticity of demand is -1.8 and the elasticity of supply is 1, then consumers are than producers and the relative consumer burden will equal . Hint:...
Refer to the table above. If the market is originally in
equilibrium and a price ceiling of $50 is imposed, which of the
following is incorrect?
A. Net surplus in the economy will decrease
B. Producer surplus will decrease
C. Supply will decrease
D. Consumers will purchase less than they would at the
equilibrium price
E. Producers will sell less than they would at the equilibrium
price
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