What Would Happen If The Clean Power Plan Is Repealed
1. Over the past 30 years, technological advances accept reduced the toll of computer chips. How do you lot think this has affected the market for computers? For computer software? For typewriters?
Technological advances that reduce the cost of producing computer fries represent a pass up in an input price for producing a computer. The event is a shift to the right in the supply of computers, equally shown in Figure. The equilibrium toll falls and the equilibrium quantity rises, as the figure shows.
Because estimator software is a complement to computers, the lower equilibrium price of computers increases the demand for software. As Figure below shows, the result is a ascent in both the equilibrium price and quantity of software.
Because typewriters are substitutes for computers, the lower equilibrium price of computers reduces the demand for typewriters. As Figure below shows, the result is a pass up in both the equilibrium cost and quantity of typewriters.
2. Using supply-and-need diagrams, testify the event of the post-obit events on the market for sweatshirts.
a. A hurricane in South Carolina damages the cotton crop.
b. The price of leather jacket falls.
c. All colleges require forenoon exercise in appropriate attire.
d. New knitting machines are invented.
a. When a hurricane in
b. A turn down in the price of leather jackets leads more than people to buy leather jackets, reducing the demand for sweatshirts. The result, shown in Figure, is a pass up in both the equilibrium toll and quantity of sweatshirts.
c. The furnishings of colleges requiring students to engage in morning practice in appropriate attire raises the demand for sweatshirts, as shown in Figure. The result is an increase in both the equilibrium toll and quantity of sweatshirts.
d. The invention of new knitting machines increases the supply of sweatshirts. As Figure shows, the result is a reduction in the equilibrium price and an increase in the equilibrium quantity of sweatshirts.
iii. The market for pizza has the following demand and supply schedules:
| Price | Quantity Demanded | Quantity Supplied |
| $4 | 135 pizzas | 26 pizzas |
| 5 | 104 | 53 |
| 6 | 81 | 81 |
| 7 | 68 | 98 |
| 8 | 53 | 110 |
| 9 | 39 | 121 |
a. Graph the demand and supply curves. What is the equilibrium price and quantity in this marketplace?
b. If the bodily price in the market were above the equilibrium price, what would drive the market toward equilibrium?
c. If the actual cost in this market were below the equilibrium price, what would bulldoze the market toward the equilibrium?
Quantity supplied equals quantity demanded at a price of $6 and quantity of 81 pizzas. If the toll were greater than $vi, quantity supplied would exceed quantity demanded, and so suppliers would reduce the price to proceeds sales. If the price were less than $6, quantity demanded would exceed quantity supplied, so suppliers could raise the cost without losing sales. In both cases, the price would continue to adjust until it reached $6, the only price at which there is neither a surplus nor a shortage.
4. Because bagels and cream cheese are often eaten together, they are complements.
a. Nosotros observe that both the equilibrium price of cream cheese and the equilibrium quantity of bagels have risen. What could be responsible for this blueprint- a autumn in the price of flour or a fall in the price of milk? Illustrate and explicate your answer.
b. Suppose instead that the equilibrium price of cream cheese has risen but the equilibrium quantity of bagel has fallen. What could exist responsible for this pattern- a rise in the price of flour or a rise in the price of milk? Illustrate and explain your answer.
a. Considering flour is an ingredient in bagels, a decline in the price of flour would shift the supply curve for bagels to the correct. The consequence, shown in Effigy, would be a fall in the price of bagels and a ascent in the equilibrium quantity of bagels.
Considering cream cheese is a complement to bagels, the fall in the equilibrium toll of bagels increases the demand for cream cheese, as shown in Figure below. The result is a ascension in both the equilibrium price and quantity of foam cheese. Then, a fall in the cost of flour indeed raises both the equilibrium cost of foam cheese and the equilibrium quantity of bagels.
What happens if the cost of milk falls? Because milk is an ingredient in foam cheese, the fall in the toll of milk leads to an increase in the supply of cream cheese. This leads to a decrease in the cost of cream cheese, rather than a rising in the cost of cream cheese. So a fall in the price of milk could not take been responsible for the pattern observed.
b. In part (a), we found that a fall in the cost of flour led to a ascension in the price of foam cheese and a rise in the equilibrium quantity of bagels. If the price of flour rose, the reverse would exist true; it would atomic number 82 to a fall in the price of foam cheese and a fall in the equilibrium quantity of bagels. Because the question says the equilibrium price of cream cheese has risen, it could not have been caused by a rise in the price of flour.
What happens if the cost of milk rises? From part (a), we plant that a fall in the price of milk caused a decline in the price of foam cheese, so a ascension in the price of milk would crusade a rise in the price of cream cheese. Because bagels and cream cheese are complements, the ascent in the price of cream cheese would reduce the need for bagels, as Figure below shows. The upshot is a decline in the equilibrium quantity of bagels. And so a rising in the price of milk does cause both a rise in the price of foam cheese and a pass up in the equilibrium quantity of bagels.
five. Suppose that the cost of basketball game tickets at your college is determined by marketplace forces. Currently, the demand and supply schedules are as follows:
| Price | Quantity Demanded | Quantity Supplied |
| $4 | 10,000 tickets | 8,000 tickets |
| 8 | eight,000 | 8,000 |
| 12 | 6,000 | eight,000 |
| 16 | 4,000 | 8,000 |
| twenty | 2,000 | eight,000 |
a. Depict the demand and supply curves. What is unusual about this supply curve? Why might this be true?
b. What are the equilibrium price and quantity of tickets?
c. Your higher plans to increase full enrollment next twelvemonth past 5,000 students. The additional students will have the following demand schedule:
| Price | Quantity demanded |
| $4 | 4,000 tickets |
| 8 | 3,000 |
| 12 | 2,000 |
| 16 | 1,000 |
| 20 | 0 |
Now add the old demand schedule and the demand schedule for the new students to calculate the new demand schedule for the unabridged college. What will be the new equilibrium price and quantity?
a. As Figure below shows, the supply curve is vertical. The abiding quantity supplied makes sense considering the basketball arena has a fixed number of seats at whatever price.
b. Quantity supplied equals quantity demanded at a toll of $viii. The equilibrium quantity is viii,000 tickets.
c.
| Price | Quantity Demanded | Quantity Supplied |
| $4 | 14,000 | 8,000 |
| $8 | xi,000 | viii,000 |
| $12 | 8,000 | viii,000 |
| $16 | 5,000 | 8,000 |
| $20 | ii,000 | 8,000 |
The new equilibrium toll volition be $12, which equates quantity demanded to quantity supplied. The equilibrium quantity remains eight,000 tickets.
6. The government has decided the free-market price of cheese is too depression.
a. Suppose the government imposes a binding toll floor in the cheese marketplace. Describe a supply-and-demand diagram to show the result of this policy on the price of cheese and quantity of cheese sold. Is at that place a shortage or a surplus of cheese?
b. Producers of cheese complain that the price floor has reduced their total acquirement. Is this possible? Explain.
c. In response to the cheese producers' complaints, the regime agrees to purchase all the surplus cheese at the price floor. Compared to the basic toll floor, who benefits from this new policy? Who loses?
a. The imposition of a binding toll floor in the cheese market is shown in Effigy four. In the absence of the price floor, the cost would be P 1 and the quantity would be Q one. With the floor set at P f, which is greater than P 1, the quantity demanded is Q 2, while quantity supplied is Q 3, and then there is a surplus of cheese in the amount Q 3 – Q 2.
b. The farmers' complaint that their total acquirement has declined is correct if need is elastic. With elastic demand, the percent decline in quantity would exceed the percent rise in price, so full revenue would reject.
c. If the government purchases all the surplus cheese at the price floor, producers benefit and taxpayers lose. Producers would produce quantity Q 3 of cheese, and their full revenue would increase essentially. Nevertheless, consumers would buy simply quantity Q 2 of cheese, so they are in the same position as before. Taxpayers lose considering they would be financing the purchase of the surplus cheese through higher taxes.
vii. A recent study found that the demand and supply for Frisbees are as follows:
| Cost per Frisbee | Quantity Demanded | Quantity Supplied |
| $11 | 1 1000000 Frisbees | 15 million Frisbees |
| x | ii | 12 |
| 9 | 4 | 9 |
| 8 | six | 6 |
| seven | 8 | three |
| 6 | 10 | 1 |
a. What are the equilibrium price and quantity of Frisbees?
b. Frisbee manufacturers persuade the authorities that Frisbee product improves scientists' agreement of aerodynamics and thus is of import for national security. A concerned Congress votes to impose a price flooring of $2 above the equilibrium price. What is the new market price? How many Frisbees are sold?
c. Irate college students march on Washington and demand a reduction in the toll of Frisbees. An even more than concerned Congress votes to repeal the price floor and impose a cost ceiling $1 below the former cost floor. What is the new market toll? How many Frisbees are sold?
a. The equilibrium price of Frisbees is $viii and the equilibrium quantity is half dozen million Frisbees.
b. With a price floor of $10, the new market price is $10 considering the price floor is binding. At that cost, only two million Frisbees are sold, because that is the quantity demanded.
c. If in that location's a price ceiling of $9, it has no effect, considering the market equilibrium price is $8, which is below the ceiling. So the market toll is $8 and the quantity sold is half dozen meg Frisbees.
8. Suppose the federal government requires beer drinkers to pay a $ii revenue enhancement on each instance of beer purchased. (In fact, both federal and state governments impose beer taxes of some sort.)
a. Draw a supply-and-demand diagram of the market for beer without the revenue enhancement. Prove the price paid by consumers, the price received past producers and the quantity of beer sold. What is the difference betwixt the price paid past consumers and the price received past producers?
b. Now draw a supply-and-demand diagram for the beer market with the taxation. Show the cost paid past consumers, the price received by producers and the quantity of beer sold. What is the difference between the price paid by consumers and the toll received past producers? Has the quantity of beer sold increased or decreased?
a. Effigy below shows the market for beer without the tax. The equilibrium price is P 1 and the equilibrium quantity is Q 1. The toll paid by consumers is the aforementioned as the price received by producers.
b. When the tax is imposed, it drives a wedge of $2 between supply and demand, every bit shown in Figure half-dozen. The price paid by consumers is P ii, while the price received by producers is
P ii – $2. The quantity of beer sold declines to Q 2.
nine.Explain how heir-apparent's willingness to pay, consumer surplus and the demand curve are related.
The price a buyer is willing to pay, consumer surplus, and the demand curve are all closely related. The superlative of the need curve represents the willingness to pay of the buyers. Consumer surplus is the area below the demand curve and in a higher place the price, which equals the price that each buyer is willing to pay minus the toll actually paid.
10. Explain how seller's costs, producer surplus, and the supply curve are related.
Sellers' costs, producer surplus, and the supply bend are all closely related. The height of the supply curve represents the costs of the sellers. Producer surplus is the area below the cost and above the supply curve, which equals the price received minus each seller'southward costs of producing the good.
11. In a supply-and-demand diagram, prove producer and consumer surplus in the market equilibrium.
12. What is efficiency? Is information technology the only goal of economical policymakers?
An allocation of resources is efficient if information technology maximizes total surplus, the sum of consumer surplus and producer surplus. But efficiency may not be the merely goal of economic policymakers; they may as well be concerned near equity ¾ the fairness of the distribution of well-beingness.
13. Name two types of market failure. Explain why each may crusade marketplace outcomes to exist inefficient .
Ii types of market place failure are market ability and externalities. Market ability may cause market outcomes to be inefficient because firms may cause price and quantity to differ from the levels they would be under perfect competition, which keeps full surplus from existence maximized. Externalities are side effects that are not taken into business relationship by buyers and sellers. As a result, the gratis market place does not maximize full surplus.
Source: http://web.mnstate.edu/stutes/Econ202/Econ202/Fall%202017/key4.htm
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