Fantaa is the only soft drinks manufacturer in Country V. Weekly, Fantaa is able to produce 6.34 million cans of soft drinks. Residents in Country V loves Fantaa's soft drinks and consume all 6.34 million cans of soft drinks. The market-clearing price is $0.89 per can. Answer the following questions: a. When the domestic supply and demand for soft drinks in Country V are equal, the market is? E suppliers, U for Unable to make a conclusion or P for totally impossible and only theoretical. Type E for in Equilibrium, M for needing More b. Health experts in Country V found that it is extremely unhealthy to consume a large number of soft drinks. They decided to lobby and pressure the government to implement a price floor of $1.33 per can of soft drink. If the price floor is implemented, it is expected that the quantity demanded for Fantaa's soft drinks will drop to 4.95 million cans. It is given that the opportunity cost of producing the last can of soft drink at 4.95 million cans is $0.55 per can. Assuming the price floor is successfully implemented, what is the amount of consumer surplus being converted to producer surplus when the price is increased from $0.89 per can to $1.33 per can? $ million. Answer in millions to two decimal places. c. With an increase in prices for locally produced soft drinks, consumers started looking to the black market for cheaper imported soft drinks (that are not affected by the price floor). Will the existence of this black market likely increase or decrease the consumer surplus? Type I for Increase or D for Decrease.
Fantaa is the only soft drinks manufacturer in Country V. Weekly, Fantaa is able to produce 6.34 million cans of soft drinks. Residents in Country V loves Fantaa's soft drinks and consume all 6.34 million cans of soft drinks. The market-clearing price is $0.89 per can. Answer the following questions: a. When the domestic supply and demand for soft drinks in Country V are equal, the market is? E suppliers, U for Unable to make a conclusion or P for totally impossible and only theoretical. Type E for in Equilibrium, M for needing More b. Health experts in Country V found that it is extremely unhealthy to consume a large number of soft drinks. They decided to lobby and pressure the government to implement a price floor of $1.33 per can of soft drink. If the price floor is implemented, it is expected that the quantity demanded for Fantaa's soft drinks will drop to 4.95 million cans. It is given that the opportunity cost of producing the last can of soft drink at 4.95 million cans is $0.55 per can. Assuming the price floor is successfully implemented, what is the amount of consumer surplus being converted to producer surplus when the price is increased from $0.89 per can to $1.33 per can? $ million. Answer in millions to two decimal places. c. With an increase in prices for locally produced soft drinks, consumers started looking to the black market for cheaper imported soft drinks (that are not affected by the price floor). Will the existence of this black market likely increase or decrease the consumer surplus? Type I for Increase or D for Decrease.
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter8: Understanding Markets And Industry Changes
Section: Chapter Questions
Problem 8MC
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Transcribed Image Text:Fantaa is the only soft drinks manufacturer in Country V. Weekly, Fantaa is able to produce 6.34 million cans of soft drinks. Residents in Country V loves Fantaa's soft drinks and
consume all 6.34 million cans of soft drinks. The market-clearing price is $0.89 per can.
Answer the following questions:
a. When the domestic supply and demand for soft drinks in Country V are equal, the market is? E
suppliers, U for Unable to make a conclusion or P for totally impossible and only theoretical.
Type E for in Equilibrium, M for needing More
b. Health experts in Country V found that it is extremely unhealthy to consume a large number of soft drinks. They decided to lobby and pressure the government to
implement a price floor of $1.33 per can of soft drink. If the price floor is implemented, it is expected that the quantity demanded for Fantaa's soft drinks will drop to 4.95
million cans. It is given that the opportunity cost of producing the last can of soft drink at 4.95 million cans is $0.55 per can. Assuming the price floor is successfully
implemented, what is the amount of consumer surplus being converted to producer surplus when the price is increased from $0.89 per can to $1.33 per can? $
million. Answer in millions to two decimal places.
c. With an increase in prices for locally produced soft drinks, consumers started looking to the black market for cheaper imported soft drinks (that are not affected by the price
floor). Will the existence of this black market likely increase or decrease the consumer surplus?
Type I for Increase or D for Decrease.
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