Homework Answers
a.
Price controls are government regulated minimum or maximum prices which are set for specific goods. It is set usually by the government so that it is affordable even to common people.
Hence black market may develop as a result of price control because individual can profit by illegal exchanges.
b.
The price ceiling is a legal maximum price which can be charged by the sellers and it is set below the equilibrium price. The price ceiling imposed by the government leads shortage of goods.
If price ceiling is set below the equilibrium price, then it will be binding and if it is set above the equilibrium price, then it will be not binding.
c.
Since the price floor is the legal minimum price which can be charged and it is set above the equilibrium price. It leads surplus of outputs. So when the price floor is set above the equilibrium price, only then it is effective but when it is set either below the equilibrium price or at the equilibrium price, then it will be ineffective. So there will be no unintended inventory and market gets cleared. Hence black market may develop as a result of price control because individual can profit by illegal exchanges.
d.
When prices of products are set below equilibrium, then less than the equilibrium quantity will be traded and so a deadweight loss arises and vice-versa. The DWL arises because total surplus decreases due to distortion of quantity traded due price control.
e.
The consumer surplus is the area below the demand curve and above the price.
Since producer surplus is the area below the price and above the supply curve.
The sum of producer and consumer surplus is defined as the social surplus.
f. and g
Add Answer to:
4. Government Intervention A) Define (in your own words, please do not use the book, or...
Suppose that the demand curve for organic tomatoes is Q = 120-10p, and the supply curve...
Suppose that the demand curve for organic tomatoes is Q = 120-10p, and the supply curve is Q=10p. The government imposes a price control of p = 4. (a) Without government intervention, what is the equilibrium price and quantity? (b) Without government intervention, what is the consumer surplus, producer surplus, and deadweight loss? Use a graph in your calculations. (c) Is the price control a price ceiling or price floor? Why? With the price control, what is the new equilibrium...
3, (15%) For each of the following, write either True or False, and justify your answer . Suppose that under a free...
3, (15%) For each of the following, write either True or False, and justify your answer . Suppose that under a free market, the Total Surplus is $3 million. Under a price ceiling, the Total Surplus drops to $2 million. Therefore, the Deadweight Loss is $1 million Minimum wage causes a reduction in profits, an increase in prices, or a decrease in employment or hours worked. A price ceiling causes a drop in Consumer Surplus. The Deadweight Loss is the...
Many governments control the price of tobacco by creating a price floor. If a government decides...
Many governments control the price of tobacco by creating a price floor. If a government decides to create a price floor for a product, the economy will have a deadweight loss. Draw a supply and demand curve and show how the price floor will create deadweight loss. In your diagram show the areas for Consumer Surplus, Producer Surplus, and Deadweight Loss. Government regulations in some countries do not allow Milk price to be more than a certain price. Should we...
1)Define and give an example of a common resource. Without government intervention, will people use this...
1)Define and give an example of a common resource. Without government intervention, will people use this good too much or too little? Why? 2) Define and give an example of a public good. Is it likely that the private market provide this good on its own? Explain.
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
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...
Please define each of the following key terms in your own words as well as give...
Please define each of the following key terms in your own words as well as give a brief example of each: a) Labeling Theory b) Theory of Differential Association c) Formal and informal social controls
Please right click the image and click Open Image In New Tab for better quality picture....
Please right click the image and click Open Image In New Tab for
better quality picture.
Applications of Supply and Demand Problem Set1 What is the 2. First consider a situation without any government interventions and no price controls. In that case, what is the equilibrium quantity? What is the equilibrium price? 8. What is the size of consumer surplus when a price ceiling of $5 is imposed? size of producer surplus when a price ceiling of $5 is imposed?...
The government of Venezuela imposed price ceilings on a wide variety of consumer goods from 2007...
The government of Venezuela imposed price ceilings on a wide variety of consumer goods from 2007 to at least 2015 (the time of writing) The markets for flour, sugar, and cooking oil were subject to strong price controls that required they be sold below the market price. As a result of these price ceilings, in 2015 the government required that producers provide between 30 and 100 percent of their output to the government. Use the graph to the right to...
Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed...
Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at RO. 1) Refer to Figure 4-10. What is the area that represents the portion of producer surplus transferred to consumers as a result of the rent ceiling? A) D+E B) D+F CD DF 2) Refer to Figure 4-10. What area represents the deadweight loss after the imposition of the ceiling? A) G+ H B ) J+ H C ) C...
not sure what equation to use to find the supply and demand curves Unit 7-Market Intervention:...
not
sure what equation to use to find the supply and demand
curves
Unit 7-Market Intervention: Price Ceilings and Floors, Taxes Suppose that the demand curve for coffee is Q = 10-P and the supply curve is Q = P. Draw the supply and demand curves below. NWU1000 2 3 4 5 6 7 8 9 10 1. What is the equilibrium price and quantity? 2. What is total surplus, consumer surplus, and producer surplus? 3. Suppose the government implemented...
3, (15%) For each of the following, write either True or False, and justify your answer . Suppose that under a free market, the Total Surplus is $3 million. Under a price ceiling, the Total Surplus drops to $2 million. Therefore, the Deadweight Loss is $1 million Minimum wage causes a reduction in profits, an increase in prices, or a decrease in employment or hours worked. A price ceiling causes a drop in Consumer Surplus. The Deadweight Loss is 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...
Please right click the image and click Open Image In New Tab for
better quality picture.
Applications of Supply and Demand Problem Set1 What is the 2. First consider a situation without any government interventions and no price controls. In that case, what is the equilibrium quantity? What is the equilibrium price? 8. What is the size of consumer surplus when a price ceiling of $5 is imposed? size of producer surplus when a price ceiling of $5 is imposed?...
The government of Venezuela imposed price ceilings on a wide variety of consumer goods from 2007 to at least 2015 (the time of writing) The markets for flour, sugar, and cooking oil were subject to strong price controls that required they be sold below the market price. As a result of these price ceilings, in 2015 the government required that producers provide between 30 and 100 percent of their output to the government. Use the graph to the right to...
Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at RO. 1) Refer to Figure 4-10. What is the area that represents the portion of producer surplus transferred to consumers as a result of the rent ceiling? A) D+E B) D+F CD DF 2) Refer to Figure 4-10. What area represents the deadweight loss after the imposition of the ceiling? A) G+ H B ) J+ H C ) C...
not
sure what equation to use to find the supply and demand
curves
Unit 7-Market Intervention: Price Ceilings and Floors, Taxes Suppose that the demand curve for coffee is Q = 10-P and the supply curve is Q = P. Draw the supply and demand curves below. NWU1000 2 3 4 5 6 7 8 9 10 1. What is the equilibrium price and quantity? 2. What is total surplus, consumer surplus, and producer surplus? 3. Suppose the government implemented...
Most questions answered within 3 hours.
-
1-The Electrons in a beam are moving at 2.7×108 m/s in an
electric field of 15000...
asked 2 minutes ago -
A gas tank is a vertical cylinder. It has a radius of 1m, a
height of...
asked 28 minutes ago -
Accent Software faces the following conditions. All of these
support Accent’s use of a market-penetration pricing...
asked 1 hour ago -
A mathematically inclined friend emails you the following
instructions: "Meet me in the cafeteria the first...
asked 1 hour ago -
A monopoly sells in two countries . The demand curves in the two
countries are p1...
asked 2 hours ago -
A .15kg rubber ball is bounced off a wall. Before hitting the
wall, the ball moves...
asked 3 hours ago -
A manufacturing company preparing to build a new plant is
considering three potential locations for it....
asked 3 hours ago -
B. If compound Y has approximately the same values of solubility
in toluene as compound X,...
asked 3 hours ago -
Oscar Inc. has inventory in Japan valued at 39,051,000 Yen one
year ago. One year ago...
asked 4 hours ago -
If Canada suffered from "fundamental disequilibrium," and its
government choose not to devalue its currency, a...
asked 4 hours ago -
4. How many input & output Key Value Pairs are passed into,
and emitted out of...
asked 4 hours ago -
Why would your heart not function well if constructed of
skeletal muscle? What is the particular...
asked 4 hours ago