Suppose the market demand and supply equations for Face masks are given by: Market Demand: P = 400 – 4Q Market Supply: P = 4Q a. Find the equilibrium price and quantity in this market b. What is the value of consumer surplus in this market? c. What is the value of producer surplus in this market? d. What is the value of the social surplus in this market? e. Suppose the government imposes a price ceiling of Gh150, what will happen in this market f. Graph the demand and supply functions showing the price and its effects. g. Suppose the price elasticity of demand is 2, what will be the percentage change in price that will elicit a 25% change in quantity demanded? h. Calculate the price elasticity of demand at the equilibrium i. The aim of every firm is to maximize total revenue, as the marketing manager of this company, would you advise that the price of your company's products be increased? Explain your answer. j. Your company and other firms in this industry expect the price of face masks to fall in the near future, With the aid of a diagram, explain the effect of this on the

Suppose the market demand and supply equations for Face masks are given by: Market Demand: P = 400 – 4Q Market Supply: P = 4Q a. Find the equilibrium price and quantity in this market b. What is the value of consumer surplus in this market? c. What is the value of producer surplus in this market? d. What is the value of the social surplus in this market? e. Suppose the government imposes a price ceiling of Gh150, what will happen in this market f. Graph the demand and supply functions showing the price and its effects. g. Suppose the price elasticity of demand is 2, what will be the percentage change in price that will elicit a 25% change in quantity demanded? h. Calculate the price elasticity of demand at the equilibrium i. The aim of every firm is to maximize total revenue, as the marketing manager of this company, would you advise that the price of your company's products be increased? Explain your answer. j. Your company and other firms in this industry expect the price of face masks to fall in the near future, With the aid of a diagram, explain the effect of this on the

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 6PA

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If a price floor benefits producers, why does a price floor reduce social surplus?
Question 1 Suppose the market demand and supply equations for Face masks are given by: Market Demand: P = 400 - 4Q Market Supply: P = 4Q a. Find the equilibrium price and quantity in this market b. What is the value of consumer surplus in this market? c. What is the value of producer surplus in this market? d. What is the value of the social surplus in this market? e. Suppose the government imposes a price ceiling of Gh150, what will happen in this market f. Graph the demand and supply functions showing the price and its effects. g. Suppose the price elasticity of demand is 2, what will be the percentage change in price that will elicit a 25% change in quantity demanded? h. Calculate the price elasticity of demand at the equilibrium i. The aim of every firm is to maximize total revenue, as the marketing manager of this company, would you advise that the price of your company's products be increased? Explain your answer. j. Your company and other firms in this industry expect the price…
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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…
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