Please answer the following question. Specific subject : MICROECONOMICS
The government has decided that the free-market price of cheese is too low.
Suppose the government imposes a binding price floor in the cheese market. Draw a supply-and-demand diagram to show the effect of this policy on the price of cheese and the quantity of cheese sold. Is there a shortage or surplus of cheese?
Farmers complain that the price floor has reduced their total revenue. Is this possible? Explain.
In response to farmers’ complaints, the government agrees to purchase all the surplus cheese at the price floor. Compared to the basic price floor, who benefits from this new policy? Who loses?
In: Economics
Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers.
If the economy is strong, the total revenue of firm C will be
$1,680,000.
$2,400,000.
$2,000,000.
$1,400,000.
In: Finance
Given the following information
QD = 240 - 5P
QS = p
where QD is the quantity demand, QS is the quantity supplied and P is the price.
Suppose that the government decides to impose a tax $12 per unit on sellers in this market. Determine:
a) Demand and supply equation after tax
b) Buyer's price after tax
c) Seller's price after tax
d) Quantity after tax
e) Consumer surplus after tax
f) Producer surplus after tax
g) Tax revenue
h) Deadweight loss of the tax
i) Total surplus after tax
In: Economics
1) Consider the market for milk and suppose the government taxes milk at $0.50 a gallon.
a) Draw a demand and supply diagram and label the following points:
A – the equilibrium without the tax
X – the price that consumers pay along with the quantity of milk under the tax
Z – the price that the sellers receive along with the quantity of milk under the tax
Suppose the tax decreases to $0.25
b) Explain what happens to the quantity of milk in the market?
c) What happens to consumer surplus?
d) What happens to producer surplus?
e) What happens to the deadweight loss?
f) What happens to government revenue?
In: Economics
In a large graph, draw linear supply and demand curves that obey
the laws of demand and supply in a coordinate system. Label
everything relevant.
Show the equilibrium price and quantity, as well as consumer and
producer surplus on the graph. How do you calculate total surplus
if there are no externalities?
Suppose the government levies a tax on the sellers of the good.
In a new large graph, show (1) which curve shifts, (2) which way, and (3) derive a new equilibrium quantity, and the prices paid by buyers and received by sellers. Then show the new consumer surplus and producer surplus, as well as government revenue and the deadweight loss.
In: Economics
Suppose the market demand for cigarettes is: QD = 10 − P, and
the supply of cigarettes is: QS = −2 + P, where P is the price per
pack of cigarettes a. Graph the supply and demand curves. b. What
is the equilibrium price and quantity sold of cigarettes? Show this
on the graph. If the government imposes a cigarette tax of $1 per
pack, c. What is the price paid by consumers? d. What is the price
faced by suppliers? e. What is the government revenue from the tax?
f. How much is the consumers’ tax burden? g. How much is the
producers’ tax burden? h. What is the deadweight loss of the
tax?
In: Economics
How do you find the profit maximizing PRICE (not level of output) on a graph for a monopoly with demand, marginal revenue, marginal cost, and average total cost curves.
| Find the point where MR = MC and go straight over to the price axis. |
| Find the point where demand hits marginal cost and go straight over to the price axis. |
| Find the point where MR = MC, go straight up until you hit the demand curve, and then go straight over to the price axis. |
| Find the minimum point on the ATC curve and go straight over to the price axis. |
In: Economics
Assume now that the market in Question 2 is served by a profit maximizing monopoly. The firm is sufficiently large that its marginal cost is equal to the market supply curve in Scenario 3a. Therefore, market demand is still P = 150 - .05Q and the monopoly firm’s MC = 0.45Q + 10. The monopoly has marginal revenue MR = 150 - Q. The monopoly is a large well run firm with a short run average total cost of ATC = 0.25Q.
Suppose the monopolist perfectly price discriminates. What will be its producer surplus?
a.
$19,600.00
b.
$10,027.36
c.
$9025.00
d.
$18,050.00
In: Economics
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q= 200-2P MR=100-Q TC=5Q MC=5
a) Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing level of output?
b) Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing price?
c) Suppose that a tax of $5 for each unit produced is imposed by state government. How much profit does the monopolist earn?
In: Economics
Given the following demand and cost functions, answer the questions below. ??(?) = 150 − 3? ?(?) = 5? a) What is the perfectly competitive long-run equilibrium price and quantity? b) Suppose the market is served by a monopolist, what is the long-run equilibrium price and quantity? c) Graph the demand, marginal cost, and marginal revenue curves. Indicate the equilibrium price and quantity pairs under perfect competition and monopoly. d) What are consumer, producer, and total surplus under perfect competition? e) What are consumer, producer, and total surplus under monopoly? f) What is the size of the deadweight loss under monopoly?
In: Economics