A few years ago, a major storm hit some part of
southeaster regions of the U.S. The storm damaged water pipes,
leaving many areas without clean drinking water. Travel was also
difficult so supplies of food and other goods were disrupted. The
storm created a shortage of bottled water. As a result, bottled
water were sold at prices much higher than normal. These high
prices provoked cries of “price gouging” and calls on the
government to impose price controls on essential goods to prevent
gouging. While no one likes to pay a higher price than normal for
something, consider what would have happened with a price ceiling.
The economic intuition is revealing.
Draw a diagram showing the market for bottled water BEFORE the
storm with an equilibrium price at $5 per case. Now draw the impact
after the storm (what happens to the supply and demand curves?)
Then draw the impact of a price ceiling at $3 per case. What would
be the impact of the price ceiling on the quantity demanded? On the
quantity supplied? Who would benefit from the price ceiling and who
would be harmed? Let the graph guide your thinking. Don’t start
with your gut reaction! Did the price ceiling help the people it
was designed to help? Explain the economic reasoning behind your
analysis.
In: Economics
Suppose you are advising the government on sales tax. Should the government tax inelastic goods such as food and medicine or inelastic goods such as Netflix and Hulu subscriptions if the goal of the tax is not to be distortionary? (In which scenario would the tax have the smallest effect on quantity).
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During the novel coronavirus (COVID-19) pandemic, the Singapore government introduced lockdown measures and travel restrictions that severely reduced the trade of many small businesses. Singapore government is concerned about business closures, loss of income and unemployment in the markets concerned and is considering further interventions especially as the danger from the virus is beginning to subside. Using the demand-supply model, explain these phenomena in one or two markets of your choice. Advise which market interventions, if any, government should conduct in these markets and why.
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How important discount pricing or local residence pricing to rejuvenate the economy in Hawaii now that inter-island travel opening back up.
Also, how the hospitality and travel industry will be setting their prices using external factors affecting pricing decisions.
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How do you expect COVID-19 to affect Economic Growth: for Canada and for the World in general?
In: Economics
what are the Comparative and absolute advantages of brazil from 2000-2019
In: Economics
In: Economics
Why have banks substantially increased off-balance sheet activities over the past two decades? please explain. thank you
In: Economics
Discuss how using secondary sources (e.g., government websites from specific countries) could be a costly mistake when planning to enter a country through exporting, licensing, or foreign direct investments, and explain why.
In: Economics
Q 2) a-)Why is short-run average total cost (SATC) at a minimum at the output, at which the short-run marginal cost (SMC) curve and short-run average total cost (SATC) curve cross? Explain and draw the figure.
b-) What is the effect of higher interest rates on the quantity of real money demanded? Explain and draw the figure.
In: Economics
the impact of COVID-10 to SMEs (in Malaysia)
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Explain Demand and Supply shifts. Analyze the change in Demand & change in supply. What is the difference between a change in quantity demand and a change in quantity supply?
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Consider a competitive market for red lentils with 10,000 identical farmers, a competitive market price of $5 and the following ?? for each farmer:
MC = $0.5+ $0.05Q
Also consider the following market demand function:
QD=1,100,000-40,000P
a) Calculate the optimal level of production (in tonnes) for each farmer (show workings).
b)Assuming 10,000 lentil farmers of equal size, determine the market supply function and the equilibrium market quantity (show workings).
c) Consider that the government now imposes a 25% tax on producers, calculate the new market equilibrium price (two decimal places) and new market equilibrium output (two decimal places) (show workings).
d)Calculate the value of the deadweight loss for the consumer and the producer following a 25% tax on red lentils, as well as, the amount of government revenue.
In: Economics
Explain in detail the impact of COVID-10 to SMEs and the initiatives of the government in helping SMEs in MALAYSIA.
In: Economics