Question 8 When a binding price ceiling is imposed on a market, price no longer serves as a rationing device. the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. all buyers benefit. All of the above are correct.
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- A). Draw the supply and demand curves for the market of specific good. B). Suppose that the equilibrium price for this product is $4 and the equilibrium quantity is 100 units. If the government imposes a price ceiling of $3 what happens? Draw the new graph explaining how quantities are affected by that decision. C). Suppose that the equilibrium price for this product is $4 and the equilibrium quantity is 100 units. If the government imposes a price floor of $5 what happens? Draw the new graph explaining how quantities are affected by that decision.Use the graph below to answer the following questions: Price $15 Supply $14 $13 $12 $11 $10 Demand 25 75 125 175 225 275 QuantityCurrent Stats for Gasoline: Government Enforced Price Ceiling - $4.50/gallon Current Market Equilibrium - $3.00/gallon OPEC, the largest global supplier of oil used to make gasoline, has decided to reduce output by 50%. This policy change is expected to drive up the cost of gasoline to $5.00/gallon. How does that price change interact with the price ceiling? A. Changes the Price Ceiling from Binding to Non-Binding B. Disrupts Oil Supply C. Changes the Price Ceiling from Non-Binding to Binding D. No Change
- 12 . Problems and Applications Q10 A market is described by the following supply and demand curves: QSQS = = 3P3P QDQD = = 400−P400−P The equilibrium price is and the equilibrium quantity is . Suppose the government imposes a price ceiling of $80. This price ceiling is , and the market price will be . The quantity supplied will be , and the quantity demanded will be . Therefore, a price ceiling of $80 will result in . Suppose the government imposes a price floor of $80. This price floor is , and the market price will be . The quantity supplied will be and the quantity demanded will be . Therefore, a price floor of $80 will result in . Instead of a price control, the government levies a tax on producers of $40. As a result, the new supply curve is: QSQS = = 3(P−40)3P−40 With this tax, the market price will be , the quantity supplied will be , and the quantity demanded will be . The passage…a) In the market for sugary drinks, the current equilibrium price is $10 and the equilibrium quantity is 30. The demand choke price is $50 and the supply choke price is $5 (a) Draw a demand and supply diagram, and shade the regions that represent consumer and producer welfare. Calculate the Total welfare in this market b) In this market, you now know that E D = −0.4 and E S = 1.2. Redraw your diagram in part (a) with the correct sloping curves. In this part you do not have to shade the welfare regions. All you need to do is redraw the diagram with the same equilibrium price and quantity, and choke prices but adjust the slope of each curve to reflect their respective elasticity c) If a tax was to be implemented in this market, what percentage of the burden is borne by the buyer? d) The government plans to discourage the consumption of sugary drinks and as such, they implemented a $1 tax on every bottle produced. In this situation, the suppliers are taxed directly but they hope to pass…Problem 1. Price ceiling in the market for gas. The demand and supply for gas on a regular day is Price 3.5 2.00 2.25 2.50 2.75 3.00 3.25 140 100 60 Quantity demanded 40 Quantity supplied 60 100 140 160 200 a) Draw the demand and supply curves on a diagram. Mark the equilibrium point. Q₂² g 220 200 180 = 40 b) A price ceiling is imposed: It is illegal to sell gas above $2.25 per gallon. What is the quantity demanded and quantity supplied at this price? What is the excess demand? What is the maximum price consumers will be willing to pay for the amount of gas available in the market after the ceiling is imposed? 220 Qs= |Qo-Qs= pconsumers c) Identify the effect of the policy on the consumers and the producers. Compute the Deadweight loss. ACS = APS = DWL = d) You need to buy 20 gal of gas and you're willing to pay up to $4 per gallon. The opportunity cost of your time is $10/hour. What is the maximum amount of time you would be willing to wait in line for gas once the ceiling is…
- When the quantity demanded of a goods is equal to the quantity supplied of the goods, then-___ what is the correct answer? Is it the government is intervening in the market? There is a surplus. There is a shortage. None of themThe diagram below represents the market for butter. 2 4 8 10 12 14 Quantity Demanded and Supplied of Butter (thousands of kilograms/year) Refer to Figure 4-1. What is the shortage or surplus of butter at a market price of $5 per kilogram? a shortage equal to 4000 kilograms of butter a surplus equal to 4000 kilograms of butter a surplus equal to 7000 kilograms of butter a shortage equal to 7000 kilograms of butter Price of butter (per kilogram) %S4Consider a market that is initially in equilibrium and the equilibrium price and quantity are P and Q respectively. Then, the government decides to impose a price ceiling at a price of Pc that is less than P. Which of the following statements is correct? 1. After the price ceiling is imposed, the quantity demanded is less than the quantity supplied on the market. 2. After the price ceiling is imposed, the quantity actually sold in the market is lower than it was before the price ceiling was imposed. 3. Producer surplus in the market increased after the price ceiling was imposed. 4. Since Pc is less than P, the price ceiling is effective and therefore, there is no deadweight loss in the market.
- Price S1 20 18 16 14 12 10 SO Demand 300 400 500 1000 Quantity Suppose that the market in the graph above is at an initial equilibrium price of $10 and an equilibrium quantity of 500 units. If the government decides to add a $4 per-unit tax on this good, the equilibrium price will change to: $12 $8 $14 $4 2086 420Refer to the accompanying figure, which shows the market for cups of coffee. Consider the original supply and the original demand curve. If the government imposes a price ceiling of $1.00 on a cup of coffee, then there would be: 4 Original Supply 3.5 3 New Supply 2.5 2 1.5 1 New Demand 0.5 Original Demand 10 20 30 40 50 60 70 80 90 Quantity (cups/hour) Multiple Choice an excess demand for coffee. a short-term excess demand for coffee, followed by an increase in the equilibrium price. an excess supply of coffee. a new equilibrium at a price of $1.00 per cup and a quantity of 50 cups per hour. Price (S/cup)7 If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium. quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price. all consumers will be able to afford the product. quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.