Homework Answers
23. The deadweight loss associated with the competitive market outcome is represented by area C. Hence,option(C) is correct.
24. A $10 tax on producers would lead to largest reduction in the deadweight loss that results from the competitive market outcome.And a $45 tax on producers would lead to full reduction in deadweight loss and lead to competitive market outcome. Hence, option(A) is correct.
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Price ($) 100T Social Cost ! Private Cost 50 Quantity Figure 7 23. Refer to Figure 7, which shows a market in which the...
Price (S) 50 Quantity Figure 3 12. Refer to Figure 3. Assume that production of this good generates a $30 per unit exte...
Price (S) 50 Quantity Figure 3 12. Refer to Figure 3. Assume that production of this good generates a $30 per unit external cost. How many of the following regulations would lead to the efficient outcome? • A price ceiling at $30 • A price floor at $60 • A per-unit tax of $30 • A per-unit subsidy of $30 a) 1 b) 2 c) 3 d) 4 13. Refer to Figure 3. Assume that production of this good generates...
Price (S) 100T 500 Quantity Figure 4 15. Refer to Figure 4. Suppose there is a...
Price (S) 100T 500 Quantity Figure 4 15. Refer to Figure 4. Suppose there is a $30 external benefit associated with the production of this good. What is the most that 3rd parties would be willing to pay to have either side of the market internalize the external benefit (i.e, move from the competitive market outcome to the efficient outcome)? a) $0 b) $6,000 c) $15,000 d) $21,000
Refer to Figure 4. Suppose there is a $30 external benefit associated with the production of...
Refer to Figure 4. Suppose there is a $30 external benefit
associated with the production of this good. How many of the
following policies lead to the efficient outcome?
• A $60
price floor
• A $30
price ceiling
• A $30
tax on consumers
• A $30
subsidy to consumers
a) None of these policies lead to the efficient outcome.
b) 1 of these policies leads to the efficient outcome.
c) 2 of these policies...
Q3) Suppose that the market demand and supply curve in a competitive market are Q"-15 - 2P and QS...
Q3) Suppose that the market demand and supply curve in a competitive market are Q"-15 - 2P and QS-P. For each of the following policies, calculate the price and quantity that will be traded and the value of the deadweight loss. a) An excise tax of S1 per unit, paid by producers. b) A subsidy of $2 per unit, paid to consumers. c) A price floor of S7. d) A price ceiling of S4. e) A production quota of 3...
Price (S 100 50 25 D 500 Quantity Figure 5 20. Refer to Figure 5. How...
Price (S 100 50 25 D 500 Quantity Figure 5 20. Refer to Figure 5. How many of the following policies would a firm with market power oppose? Assume that the firm will oppose policies that lead to a reduction in producer surplus. A $60 price floor A $60 price ceiling A $30 tax on consumers A $30 subsidy to consumers a) A firm with market power will oppose 1 of the above policies b) A firm with market power...
Price (s) 10 50 Quantity Figure 6 21. Refer to Figure 6. Suppose that the consumption...
Price (s) 10 50 Quantity Figure 6 21. Refer to Figure 6. Suppose that the consumption of this good generates a $3 external cost. How many units are consumed in equilibrium absent government regulation? a) 30 b) 40 c) 50 d) 60 22. Refer to Figure 6. Suppose that the consumption of this good generates a $3 external cost. How much total surplus is generated from the transaction of the 20th unit? a) $0 b) $1.50 c) $3 d) $4.50
FIGURE #3 *101 ------- Quantity 12. {Refer to Figure 3 above). In the market shown, S'...
FIGURE #3 *101 ------- Quantity 12. {Refer to Figure 3 above). In the market shown, S' represents the market supply curve after an excise tax is levied. The portion of the excise tax paid by producers is: A. $7 B. $2 C. $5 D. $3 FIGURE #4 Price Astax Wegdle" 40 60 too Quantity 13. {Refer to Figure 4 above). In the market shown, consumers pay ___ of the excise tax. A. $4 B. $2 C. $1 D. $7 14....
Consider a hypothetical market for good X using the information below. Price Quantity demanded Quantity supplied...
Consider a hypothetical market for good X using the information below. Price Quantity demanded Quantity supplied 700 300 600 400 500 500 400 600 300 700 200 800 100 900 0 1000 Suppose that the production of good X generates pollution in the form of chemical runoff and that the pollution imposes a $4 cost on society for each gallon of good X produced. What is the optimal quantity of good X production? Does the market overproduce or underproduce? O...
14. Refer to Figure 3. Assume that production of this good generates a $30 per unit external cost. How much total surpl...
14. Refer to Figure 3. Assume that production of this good
generates a $30 per unit external cost. How much total surplus is
generated in this market at the efficient outcome?
a) $375
b) $675
c) $1,250
d) $2,175
Price (S) 50 50 Quantity Figure 3
rice P4 Supply H D F G Demand Quantity 02 29. Refer to Figure 7-23 The figure depicts a market equilibrium where th...
rice P4 Supply H D F G Demand Quantity 02 29. Refer to Figure 7-23 The figure depicts a market equilibrium where there is a tax on the good transacted. The deadweight loss as a result of the tax is represented by the area of a. A+B+D+F. b. C+H. c. B+D d. G+I Figure 8-16 Price Panel (b) Price Pasel (a) Sepply Dand Dand 1 2 34 5 67 Deantity 4 567 Denti- 1 2 30. Refer to Figure 8-16....
Price (S) 50 Quantity Figure 3 12. Refer to Figure 3. Assume that production of this good generates a $30 per unit external cost. How many of the following regulations would lead to the efficient outcome? • A price ceiling at $30 • A price floor at $60 • A per-unit tax of $30 • A per-unit subsidy of $30 a) 1 b) 2 c) 3 d) 4 13. Refer to Figure 3. Assume that production of this good generates...
Price (S) 100T 500 Quantity Figure 4 15. Refer to Figure 4. Suppose there is a $30 external benefit associated with the production of this good. What is the most that 3rd parties would be willing to pay to have either side of the market internalize the external benefit (i.e, move from the competitive market outcome to the efficient outcome)? a) $0 b) $6,000 c) $15,000 d) $21,000
Refer to Figure 4. Suppose there is a $30 external benefit
associated with the production of this good. How many of the
following policies lead to the efficient outcome?
• A $60
price floor
• A $30
price ceiling
• A $30
tax on consumers
• A $30
subsidy to consumers
a) None of these policies lead to the efficient outcome.
b) 1 of these policies leads to the efficient outcome.
c) 2 of these policies...
Q3) Suppose that the market demand and supply curve in a competitive market are Q"-15 - 2P and QS-P. For each of the following policies, calculate the price and quantity that will be traded and the value of the deadweight loss. a) An excise tax of S1 per unit, paid by producers. b) A subsidy of $2 per unit, paid to consumers. c) A price floor of S7. d) A price ceiling of S4. e) A production quota of 3...
Price (S 100 50 25 D 500 Quantity Figure 5 20. Refer to Figure 5. How many of the following policies would a firm with market power oppose? Assume that the firm will oppose policies that lead to a reduction in producer surplus. A $60 price floor A $60 price ceiling A $30 tax on consumers A $30 subsidy to consumers a) A firm with market power will oppose 1 of the above policies b) A firm with market power...
Price (s) 10 50 Quantity Figure 6 21. Refer to Figure 6. Suppose that the consumption of this good generates a $3 external cost. How many units are consumed in equilibrium absent government regulation? a) 30 b) 40 c) 50 d) 60 22. Refer to Figure 6. Suppose that the consumption of this good generates a $3 external cost. How much total surplus is generated from the transaction of the 20th unit? a) $0 b) $1.50 c) $3 d) $4.50
FIGURE #3 *101 ------- Quantity 12. {Refer to Figure 3 above). In the market shown, S' represents the market supply curve after an excise tax is levied. The portion of the excise tax paid by producers is: A. $7 B. $2 C. $5 D. $3 FIGURE #4 Price Astax Wegdle" 40 60 too Quantity 13. {Refer to Figure 4 above). In the market shown, consumers pay ___ of the excise tax. A. $4 B. $2 C. $1 D. $7 14....
Consider a hypothetical market for good X using the information below. Price Quantity demanded Quantity supplied 700 300 600 400 500 500 400 600 300 700 200 800 100 900 0 1000 Suppose that the production of good X generates pollution in the form of chemical runoff and that the pollution imposes a $4 cost on society for each gallon of good X produced. What is the optimal quantity of good X production? Does the market overproduce or underproduce? O...
14. Refer to Figure 3. Assume that production of this good
generates a $30 per unit external cost. How much total surplus is
generated in this market at the efficient outcome?
a) $375
b) $675
c) $1,250
d) $2,175
Price (S) 50 50 Quantity Figure 3
rice P4 Supply H D F G Demand Quantity 02 29. Refer to Figure 7-23 The figure depicts a market equilibrium where there is a tax on the good transacted. The deadweight loss as a result of the tax is represented by the area of a. A+B+D+F. b. C+H. c. B+D d. G+I Figure 8-16 Price Panel (b) Price Pasel (a) Sepply Dand Dand 1 2 34 5 67 Deantity 4 567 Denti- 1 2 30. Refer to Figure 8-16....
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