Price Controls and Quotas: Meddling 1. In order to ingratiate himself with vote lower the price of taxi rides. Assume, for distance and therefore cost the same. The supply schedules for taxi rides. c. Suppose that the stock market crashes poorer. This reduces the quantity of taxi at any given price. Illustrate this change i to the scale on the quantity axis. Fare (S/ride) 7.0 65 60 5.5 5.0 45 Market for taxi rides 6 9 12 14
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the supply and demand line both need moved
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- Explain in words only if the following statements are true or false. If the statement is false, explain what is wrong with it as it is currently written. If the statement is true, explain why it is true. (Note: assume a pre-covid-world, when people used to use the subway) a) When senior citizens get discounted metrocards, their consumer surplus for a subway ride is higher than that of non-senior citizens, who do not get the discount.($) Price Tax imposed on: Supply Demand 90 $90.00 Excise Tax (0- $20) 0,00 80 70 Demand 60 Perfectly Relabively Inelastic Elastic Relatively Elastic 50 $50.00 40 Supply Less Perfectly 30 Elastic Elastic Perfectly Elaste 20 10 CALCULATIONS 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Quantity (thousands per week) Price Paid Quantity No Tax $50.00 4,000 With Tax $50.00 4,000The annual demand and supply for liquor in a certain state is given by the following equation: Qd= 500,000 − 20,000P Qs=30,000P where P is the price per gallon and QD is quantity of gallons demanded per year. a. Suppose that a $1-per-gallon tax is levied on the price of liquor received by sellers. Use both graphic and algebraic techniques to show the impact of the tax on market equilibrium. b. Calculate (i) the excess burden of the tax, (ii) the amount of revenues collected, and (iii) the incidence of the tax between buyers and sellers.
- 3. Setormilients of demand The following grapn enews comano curve for secans (for example, Toyota Camrys or Honda Accords) in New York City. For simplicity, assume that are arcical and mail for the same price. Initially, the graph shows market demand under the following circumstances: Average household COMES $50,000 per year, the face of a gallon of gas is $4.00 per gallon. 1808 the wiput cool to help you answer the following questions you will not be graded on any changes you make to this graph. Note. Once you intevole in a white teld, the graph and any corresponding amounts in each grey field will change accordingly. Damund for Seciamy Demand 40000 900 100 300 QUANTITY (Sedans per month) Graph Input Tool Demand for Sedans Price of a sedan 25 (Thousand of dollars) Quantity 338 Demanded (Sedens per month) Demand Shifters Average Income (Thousands of dollars) 50 Price of Gas (Dollars per gallon) E Consider the grabil Suppose that the price of a sedan decreased from $25,000 to $20,000.…California has higher income taxes than any other state in the United States. As a result, many business owners, like Elon Musk and Joe Rogan, have moved their enterprises to states with lower state income taxes. As a result, its likely that California will start to experience less tax revenue even as they increase tax rates. What concept in economics does this best illustrate? O The Law of Demand O Subsidies O Price Floors O The Laffer CurveMicroeconomics Question 1: True or False. Explain. a. When the demand curve of a good shift to the left, it becomes more inelastic at every level of price. b. If the tax burden falls entirely on buyers a good (tax in per unit imposed on seller), the demand of that good should be perfectly elastic. Question 2: Suppose the demand and supply for gasoline are given by =20-2P and Q -4+10 where P is the price in $ per gallon, and quantity is measured in millions of gallons per day a. Find the equilibrium price/quantity for this market b. How much is the price elasticity of demand and price elasticity of supply at this equilibrium? c. Suppose that the state government decides to tax $2/gallons on consumers. Find the new equilibrium prices and the new equilibrium quantity d. What is total tax payment in dollars to the state government? How much is the share of tax paid by consumers e Graph your results
- b) In a hypothetical situation, Government of Pakistan wants to put a curb on cigarette smoking through economic policy: i. Studies indicate that the price elasticity of demand for cigarettes is about 0.5. If a pack of cigarettes currently costs Rs.200 and the government wants to reduce smoking by 22 percent, by how much should it increase the price? ii. If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now? iii. Studies also find that teenagers have a higher price elasticity of demand than adults. Why might this be true?We have heard of "Rock the Vote" or even "Vote or Die." What these ad campaigns are attempting to do is reduce the amount of voter apathy. What do economists call this situation? Using the principles of economics, please explain why there is such a lack of interest in being informed and voting. .Question 28 Choose the TRUE statements, according to the article "Obamacare's premiums are spiking. Does that mean the law is failing?" Choose all that apply. O a. States that have more competition on the exchanges also have had less of a premium spike. O b. About half of the people purchasing insurance on the exchanges get subsidies. OC. People buying insurance on the ACA exchanges are typically middle-class. O d. Since the ACA became law, employer-sponsored coverage has held fairly steady, in terms of the number of people covered by employers. Oe The ACA's exchange marketplaces are half as big as expected. Of. The ACA has increased the number of people with health insurance. Question 29 Mark has $60,000 in income per year and faces a 35% chance of having $15,000 in medical bils. Suppose his utlity function over income is U=112 (square root of income). What is Mark's expected lose? I Select ) Would he be willing to pay more than this for insurance? (Select
- 1. Assume that the demand for cigarettes is Qd=1600-30P and the supply of cigarettes is Qs=1400+70P: a. Calculate the equilibrium price and quantity and show them on a supplyand demand diagram. b. Suppose the government levies a $2 tax for each unit of cigarettes sold.Draw this on the diagram and calculate the new equilibrium price andquantity. c. Calculate the price elasticity of demand given these two price andquantity points. Is the demand for cigarettes price elastic or inelastic onthis part of the demand curve? Interpret the elasticity in words (i.e. If theprices rises by 10%, by what percentage will consumption fall?) d. On a graph, identify the tax revenue generated by this tax. e. Indicate each area on the graph with a letter and show in a table theconsumer surplus and the producer surplus before and after the tax. Also,indicate the deadweight loss associated with this tax. f. If your policy advisor boss wanted you to provide him/her witharguments in favor of this cigarette…ECON1000 - Principles of Economics 1 | S1 21/22 Time left 0:13:59 A tax is imposed on producers of a good. For a given supply curve, the more price elastic the demand for the product, the greater the tax incidence on uestion 16 t yet Swered ked out of Select one: a. producers.. b. the tax payer. C. consumers. O d. both consumers and producers equally. page Next pageYou are Brandon Johnson. The city needs money. You are contemplating 2 sources of revenue: levying a tax on gas in Chicago at $.50/ gal, and/or increasing the CTA fare $.25. The 2 demand schedules are as follows. Gas price Gallons demanded (in millions) CTA fare Number of riders (one way) (in millions) $4.50 1 $2.00 6 4.00 1.1 1.75 8 3.50 1.2 1.50 10 3.00 1.3…