The Reinheitsgebot is a set of laws established in the 1500s that regulate the production and...
The Reinheitsgebot is a set of laws established in the 1500s that regulate the production and sale of beer in Germany. Among its provisions, the edict set maximum prices that brewers could charge at various times of the year: "From Michaelmas to Georgia, the price for one [Bavarian Liter] is not to exceed one Pfennig Munich value." Cheap beer — this must be a great thing for consumers. Suppose that the demand for beer is given by Q^D=6,000−1,500P , and the supply of beer is given by Q^S=−1,000+2,000P.
1. Accurately graph the demand, supply and price ceiling curves.
2. Without the price ceiling of 1-Pfennig.
a. What is the equilibrium price of beer?
b. What is the equilibrium quantity of beer?
c. What is the producer surplus?
d. What is the consumer surplus?
3. With the price ceiling of 1-Pfennig.
a. What is the producer surplus received by beer producers after the price ceiling is imposed?
b. What is the consumer surplus received by beer producers after the price ceiling is imposed?
4. After the price ceiling is imposed, beer drinkers see their surplus.
Homework Answers
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The Reinheitsgebot is a set of laws established in the 1500s
that regulate the production and...
Use the accompanying graph to answer these questions. a. Suppose demand is D and supply is...
Use the accompanying graph to answer these questions.
a. Suppose demand is D and supply is S0. If a price
ceiling of $6 is imposed, what are the resulting shortage and full
economic price?
Shortage:
Full economic price: $
b. Suppose demand is D and supply is S0. If a price
floor of $12 is imposed, what is the resulting surplus? What is the
cost to the government of purchasing any and all unsold
units?
Surplus: units
Cost to government: $...
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2. The demand and supply functions for basic cable TV in the local market are given...
2. The demand and supply functions for basic cable TV in the local market are given as: OD 200,000 4,000P 2s 20,000 +2,000P. (a) Find the equilibrium price and quantity and the consumer and producer surplus. (b) Suppose the government introduces a price ceiling of 15 on the price of basic cable service s. Calculate the new equilibrium price and quantity and the consumer and producer surplus. (c) Who gains and who loses from this price ceiling. Explain using a...
4. Market demand is given as QD-210-3P. Market supply is given as QS competitive equilibrium, what will be the value of consumer surplus? a. $1400 2P+50. In a perfectly b. $2166 .$3267 d. $6538...
4. Market demand is given as QD-210-3P. Market supply is given as QS competitive equilibrium, what will be the value of consumer surplus? a. $1400 2P+50. In a perfectly b. $2166 .$3267 d. $6538 5. Orange juice and apple juice are substitutes. Suppose bad weather sharply reduced the orange harvest. What would the impact be? a increase consumer surplus in the market for orange juice but decrease producer surplus in the market for apple juice b. increase consumer surplus in...
The demand and supply conditions of market for beer are given by the following equations: Qd...
The demand and supply conditions of market for beer are given by the following equations: Qd = 72 - P and Qs = -18 + P a) Find the initial equilibrium price and quantity. b) Calculate the consumer surplus and producer surplus for the equilibrium. c) Suppose that government impose a price floor at P=66 to control the consumption of beer. Is this policy effective? What are price and quantity consumed after this intervention of government? d) Going back to...
101 10 20 price . 18 .. 16 ... E- .. .. . 10 20 30...
101 10 20 price . 18 .. 16 ... E- .. .. . 10 20 30 40 50 Refer to the figure above, assuming that the demand curve's price intercept is at $20 and the supply's intercept is at (0,0). You will need these intercepts for the calculations. Please answer the following questions. 1. Please calculate the consumer surplus, producer surplus and the Refer to the figure above, assuming that the demand curve's price intercept is at $20 and the...
Refer to the table above. If the market is originally in equilibrium and a price ceiling...
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
Supply P* Gi Demand Qd Qs Quantity
1. A market has supply and demand curves that follow the following set of equations: Supply...
1. A market has supply and demand curves that follow the following set of equations: Supply P = 30s + 6 Demand P = -20p + 146. For both of these problems pictures are not required but the problems may be much easier if you draw some. a) Find the equilibrium price and quantity in this market and the consumer and producer surplus from the equilibrium price and quantity. (1 point) b) If there is a ceiling price in this...
now? 3. Use the graph below to answer the following questions. 54.00 Supply 3.00 Demand 10,000...
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Consider the supply and demand for broadband Internet service, given as follows: Q D = 224 – 4P, and QS= 12.5P – 150 wh...
Consider the supply and demand for broadband Internet service, given as follows: Q D = 224 – 4P, and QS= 12.5P – 150 where Q is the number of subscribers in a given area (in hundreds) and P is the price in dollars per month. a. The equilibrium price of broadband Internet service b. The equilibrium quantity of broadband Internet service c. Consumer surplus d. Producer surplus e. The total surplus received by producers and consumers together
Use the accompanying graph to answer these questions.
a. Suppose demand is D and supply is S0. If a price
ceiling of $6 is imposed, what are the resulting shortage and full
economic price?
Shortage:
Full economic price: $
b. Suppose demand is D and supply is S0. If a price
floor of $12 is imposed, what is the resulting surplus? What is the
cost to the government of purchasing any and all unsold
units?
Surplus: units
Cost to government: $...
2. The demand and supply functions for basic cable TV in the local market are given as: OD 200,000 4,000P 2s 20,000 +2,000P. (a) Find the equilibrium price and quantity and the consumer and producer surplus. (b) Suppose the government introduces a price ceiling of 15 on the price of basic cable service s. Calculate the new equilibrium price and quantity and the consumer and producer surplus. (c) Who gains and who loses from this price ceiling. Explain using a...
4. Market demand is given as QD-210-3P. Market supply is given as QS competitive equilibrium, what will be the value of consumer surplus? a. $1400 2P+50. In a perfectly b. $2166 .$3267 d. $6538 5. Orange juice and apple juice are substitutes. Suppose bad weather sharply reduced the orange harvest. What would the impact be? a increase consumer surplus in the market for orange juice but decrease producer surplus in the market for apple juice b. increase consumer surplus in...
The demand and supply conditions of market for beer are given by the following equations: Qd = 72 - P and Qs = -18 + P a) Find the initial equilibrium price and quantity. b) Calculate the consumer surplus and producer surplus for the equilibrium. c) Suppose that government impose a price floor at P=66 to control the consumption of beer. Is this policy effective? What are price and quantity consumed after this intervention of government? d) Going back to...
101 10 20 price . 18 .. 16 ... E- .. .. . 10 20 30 40 50 Refer to the figure above, assuming that the demand curve's price intercept is at $20 and the supply's intercept is at (0,0). You will need these intercepts for the calculations. Please answer the following questions. 1. Please calculate the consumer surplus, producer surplus and the Refer to the figure above, assuming that the demand curve's price intercept is at $20 and the...
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
Supply P* Gi Demand Qd Qs Quantity
1. A market has supply and demand curves that follow the following set of equations: Supply P = 30s + 6 Demand P = -20p + 146. For both of these problems pictures are not required but the problems may be much easier if you draw some. a) Find the equilibrium price and quantity in this market and the consumer and producer surplus from the equilibrium price and quantity. (1 point) b) If there is a ceiling price in this...
now? 3. Use the graph below to answer the following questions. 54.00 Supply 3.00 Demand 10,000 20,000 Quantity Be sure to show all calculations. (25 points) a. What is the value of the consumer surplus after a binding price ceiling? b. What is the value of deadweight loss after a binding price ceiling? c. What is the value of the producer surplus before a binding price ceiling? 1) A Moving to the next question prevents changes to this answer. Question...
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