Solve only when known correct solutions 2. Problem Solving. Refer to the figure below and show your calculation.605550Supply4540353025201510Denand10 15 20 25 30 35 40 45 50 55a. At the equilibrium price, how much is the total surplus?b. If the government imposed a price ceiling of $15, how much is the total surplus? DWL?If the government imposed a price floor of $35, how much is the total surplus? DWL?C.

Total surplus is the sum of consumer surplus and producer surplus. Deadweight loss is the loss in…

5 10 15 20 25 30 35 40 45 50 ss At the equilibrium price, how much is the total surplus? If the government imposed a price ceiling of $15, how much is the total surplus? DWL? If the government imposed a price floor of $35, how much is the total surplus? DWL?

5 10 15 20 25 30 35 40 45 50 ss At the equilibrium price, how much is the total surplus? If the government imposed a price ceiling of $15, how much is the total surplus? DWL? If the government imposed a price floor of $35, how much is the total surplus? DWL?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 7SCQ: What is the effect of a price ceiling on the quantity demanded of the product? What is the effect of...

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Does a price ceiling change the equilibrium price?
A low-income county decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at 2.40? At 2.00? At 3.50?
What is the effect of a price ceiling on the quantity demanded of the product? What is the effect of a price ceiling on the quantity supplied? Why exactly does a price ceiling cause a shortage?
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.
1. The market for pairs of sneakers is described by the following supply and demand curves: Qd = 350-P; Qs = 3P-50. a) Solve for the equilibrium price and quantity. b) If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and the size of the shortage or surplus? c) If the government imposes a price floor of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and the size of the shortage or surplus? d) Instead of a price control, the government levies a tax on produces of $20. As a result, the new supply curve is: Qs = 3(P-0)-50. Does a shortage or surplus (or neither) develop? What is the price the buyer pays, the price the seller receives, quantity supplied, quantity demanded, and the size of the shortage or surplus?
2. Below is the market information for rental housing in an urban market: Demand P₁ = $4000 Q = 0 P₂ = $2000 Q = 40 Supply Q. = 60 P. = $3000 P, = $1000 Q, = 20 a. Construct the graph for the market of rental housing based on this data. b. Set a price ceiling at $1000.00 per unit of rental housing and describe the results. 3. Below are the equations for the quantity demanded and quantity supplied for a given market. Using the equations please find the equilibrium price quantity. Remember, at equilibrium Q, - 2- 40 - 4P = Q | 10+ 6P = Q
21. Assume the following demand and supply equations: Q=100-10P, and Q=10P. a) Calculate the equilibrium price. b) Calculate the equilibrium quantity. d) If the government imposes a price ceiling of 3, what is the quantity demanded? e) if the government imposes a price ceiling of 7, what is the quantity demanded?
1. Use the graph below to answer the questions that follows: Price Dollars per gallon GH¢9.00 GH¢7.00 GH¢4.00 12,000 18,000 30,000 Quantity (gallons per day) d. Suppose imposition of maximum price legislation reduced the price oil from the equilibrium price to the maximum price control price. Calculate: Price elasticity of demand Price elasticity of supply i. ii. e. From your calculation, which of the two curves is more elastic? Explain your answer.
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…
Consider the Figure below for the market of gasoline, given the equilibrium after a change in supply from S1 to S2 Price (per gallon) $5 4 3 2 1 0 S₁ D 200 300 400 500 600 Quantity of gasoline (per month) A. the equilibrium price will decrease due to excess supply at the old equilibrium price level. B. the equilibrium price will increase due to excess demand at the old equilibrium price level. 100 S₂ C. consumer surplus will decrease due to decrease in the market price. D. the equilibrium quantity will decrease due to excess demand at the old equilibrium price level.
7. In the late 18th century, the price of bread in NYC was controlled, and set at a predetermined price which was above the market price. a) Draw a diagram showing supply and demand for bread, and the effects of the policy. Did the policy act as a price ceiling or a price floor? b) What kinds of inefficiencies were likely to arise when the controlled price of bread was above the market price? Explain in detail. One year during this period, a poor wheat harvest caused a leftward shift in the supply of bread and therefore an increase in market prices. New York bakers found that the controlled price of bread was now below the market price. c) Draw the diagram showing the effect of the price control on the market for bread during this one year period. Did the policy act as a price floor or price ceiling? d) What kinds of inefficiencies occurred during that period?
The following diagram represents market for a normal good. Demand and Supply Price $10 $9 Quantity Demanded Quantity Supplied $8 $7 $8 $5 $4 $3 $2 $1 $0 0 1 2 3 4 5 6 78 9 10 Quantity a) What are equilibrium price and equilibrium quantity? Calculate consumer surplus, producer surplus and total surplus. Show your work b) If the government imposes price ceiling of $2 in this market, will there be a surplus or shortage? Calculate. Show your calculations. c) Calculate consumer surplus and producer surplus when the price ceiling is in place. Show your calculations, show the area of cach surplus and DWL on the graph. d) Assume now, that the government imposes a price floor of $7. Calculate the consumer surplus, producer surplus and deadweight loss. Show your calculations.