A.Distinguish between consumer surplus and producer surplus. B.When governments set maximum or minimum prices, the working of the market mechanism may be disrupted. Identify four reasons why government may set a maximum price.
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A.Distinguish between
B.When governments set maximum or minimum prices, the working of the
market mechanism may be disrupted.
Identify four reasons why government may set a maximum
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- The market for pizza is characterized by adownward-sloping demand curve and an upwardsloping supply curve.a. Draw the competitive market equilibrium.Label the price, quantity, consumer surplus, andproducer surplus. Is there any deadweight loss?Explain.b. Suppose that the government forces eachpizzeria to pay a $1 tax on each pizza sold.Illustrate the effect of this tax on the pizzamarket, being sure to label the consumer surplus,producer surplus, government revenue, anddeadweight loss. How does each area compare tothe pre-tax case?c. If the tax were removed, pizza eaters and sellerswould be better off, but the government wouldlose tax revenue. Suppose that consumers andproducers voluntarily transferred some of theirgains to the government. Could all parties(including the government) be better off than theywere with a tax? Explain using the labeled areas inyour graphAssume that as the economy booms, the demand for business and consumer loans rises significantly, while the supply of funds and loans remains constant. As a result, the market interest rate for business and consumer loans rises to 20% per year. The government implements a ceiling on interest rates of 15% a year and as a result... Group of answer choices The quantity demanded of business and consumer loans rises, while the quantity supplied falls and a surplus occurs A greater number of business and consumer loans are made at a lower interest rate than previously. The demand of business and consumer loans rises, while the supply falls and a shortage occurs The quantity demanded of business and consumer loans rises, while the quantity supplied falls and a shortage occursIn a market with a binding price ceiling, increasingthe ceiling price willa. increase the surplus.b. increase the shortage.c. decrease the surplus.d. decrease the shortage
- (a) Show the market for housing in equilibrium on a diagram, where demand is less elastic than supply, andlabel the respective consumer and producer surpluses. Discuss whether this market is Pareto efficient. (b) Assume that the State Government imposes a per-unit tax on the sellers of houses. A new diagram,shows the imposition of this tax on the market for housing. Does the imposition of this tax cause a Paretoimprovement to the market, explain? (c) Is the tax imposed in part (b) effective for the collection of Government revenue? Justify your answer withreference to your diagram in part (b).The government of Brazil wishes to regulate the grocery bags by preventing the current prices from rising, what actions should it take? * a. Set a price ceiling above the equilibrium price b. Impose a direct tax on landlords c. Grant a subsidy to landlords d. Set a price ceiling below the equilibrium priceThe market for pizza is characterized by a downward-sloping demand curve and an upward-sloping supply curve. a. Draw the competitive market equilibrium. Label the price, quantity, consumer surplus, and producer surplus. Is there any deadweight loss? Explain. b. Suppose that the government forces each pizzeria to pay a $1 tax on each pizza sold. Illustrate the effect of this tax on the pizza market, being sure to label the consumer surplus, producer surplus, government revenue, and deadweight loss. How does each area compare to the pre-tax case?
- What happens if a government imposes price controls that require a selling price that is ABOVE the equilibrium price? A. SHORTAGE. That shortage then puts a pressure on prices to DROP toward equilibrium. B. SHORTAGE. That shortage then puts a pressure on prices to RISE toward equilibrium. C. SURPLUS. That surplus then puts a pressure on prices to DROP toward equilibrium. D. SURPLUS. That surplus then puts a pressure on prices to RISE toward equilibrium. What happens if a government imposes price controls that require a selling price that is BELOW the equilibrium price? A. SHORTAGE. That shortage then puts a pressure on prices to DROP toward equilibrium. B. SHORTAGE. That shortage then puts a pressure on prices to RISE toward equilibrium. C. SURPLUS. That surplus then puts a pressure on prices to DROP toward equilibrium. D. SURPLUS. That surplus then puts a pressure on prices to RISE toward equilibrium.Heip m/ultra/courses/_165411_1/cl/outline lyLab M... W WordCounter 5 Quizlet * Question Completion Status: QUESTION 13 Figure 6-25 1ice 10 Is 6. 4 1 Daftertade 10 20 30 40 50 60 70 80 quantity Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is O a. $5. O b.$2. Oc. $1. O d. $6. Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers tvThe cost of producing flat-screen TVs has fallen over the past decade. Let's consider some implications of this fact.a. Draw a supply-and-demand diagram to show the effect of falling production costs on the price and quantity of flat-screen TVs sold.b. In your diagram, show what happens to consumer surplus and producer surplus.c. Suppose the supply of flat-screen TVs is very elastic. Who benefits most from falling production costs—consumers or producers of these TVs?