Question

**Suppose that the world price of cars is less than the
domestic market equilibrium price in Italy. Further, suppose that
the government decides to impose an import quota to decrease the
number of cars imported into Italy.**

A. Using a graph, demonstrate the effect of the quota on the quantity demanded and supplied domestically and the equilibrium price, compared to the market equilibrium with free trade.

B. Illustrate on your graph the area that represents lost consumer surplus due to the quota.

C. Label on the graph and explain how the lost consumer surplus is (or is not) distributed to others in the economy.

(You can draw the graph, take a picture and attach it here. Please do *not* take a picture of your hand-written answer, it is much easier for your marker to read typed text)

Answer #1

. Suppose that, in the market for cars, demand is given by P= 10
– Q and supply is given by P= Q.
A. What is the market price that maximises total economic
surplus?
B. Illustrate on a graph and calculate consumer and producer
surplus at this price.
(Remember to clearly label any relevant prices and
quantities.)
C. Explain why no other market price leads to a Pareto efficient
outcome. (You can draw the graph, take a picture and attach...

.Using a graph, explain why a competitive market in which the
price is lower than the market equilibrium is not Pareto
efficient.
(You can draw the graph, take a picture and attach it here.
Please do *not* take a picture of your hand-written answer, it is
much easier for your marker to read typed text)

Suppose that a heat wave is expected to hit Italy in a few
weeks. It is expected to destroy much of the wineries there,
causing the price of wine to increase in the future. Show on a
graph and explain how you would expect this to affect the supply
curve for wine today. (You can draw the graph, take a picture and
attach it here. Please do *not* take a picture of your hand-written
answer, it is much easier for...

1. Suppose the following supply and demand schedules for diesel
cars
- Price of Diesel Car Quantity demanded Quantity supplied
1,000 120 20
1,500 100 30
2,000 80 40
2,500 60 60
3,000 40 70
a) What are the equilibrium price and quantity of diesel
cars?
2. Suppose the government imposes a price floor, raising 500
dollars above the equilibrium price. What is the new market price?
How many cars are sold?
2. Show and explain changes in consumer and...

1. list one case for trade restrictions
2. Suppose the following table reflects the domestic supply
and demand for radios:
Price $18 $16 $14 $12 $10 $8 $6 $4
Qs 8 7 6 5 4 3 2 1
Qd 2 4 6 8 10 12 14 16
a. Graph these market conditions and identify the equilibrium
price and quantity.
b. Now suppose that foreigners enter the market, offering to
sell an unlimited supply
of radios for $6 a piece. Illustrate...

Suppose demand for apartments in Honolulu is P=6600-0.5q and
supply is P=0.25q. Derive the equilibrium price and quantity for
apartments. Show on a graph. Calculate the producer and
consumer surplus. If the city of Honolulu passes a rent control,
forcing a rent (or price) ceiling equal to $1800, what is the
quantity supplied, quantity demanded, and the
shortage? Calculate the new consumer surplus, producer
surplus, and deadweight loss, and show these on your graph. If a
black market develops after the rent...

Suppose the equilibrium price of gasoline is $3 per
gallon.
a.
Using the demand and supply graph, draw this equilibrium in the
space below. Make this graph large, it will be used for future
questions.
b.
Now suppose the government imposes a binding price ceiling on this
market. Identify a value for this price ceiling that would be
binding and show it on the graph. Graphically show whether excess
demand or excess supply would result.
c.
With the price ceilings,...

Suppose demand for apartments in Honolulu is P=6000-0.5q and
supply is P=0.25q.
a. Derive the equilibrium price and quantity for apartments.
Show on a graph. Calculate the producer and consumer surplus.
b. If the city of Honolulu passes a rent control, forcing a rent
(or price) ceiling equal to $1600, what is the quantity supplied,
quantity demanded, and the shortage? Calculate the new consumer
surplus, producer surplus, and deadweight loss, and show these on
your graph.
c. If a black...

Suppose the labor market in NJ is at its equilibrium status with
E* and w*. Suppose the state government of NJ decides to impose a
payroll tax, t, on the worker.
a) Show me how the payroll tax affects this labor market by
drawing a graph.
b) Indicate producer’s surplus, consumer’s surplus, and
deadweight loss on your graph.

1. Draw the market for electric vehicles in initial equilibrium.
Be sure to label the axes and the curves/lines. Clearly demonstrate
the initial equilibrium price and quantity.
2. Suppose the cost of lithium-ion batteries, an input into the
production of electric vehicles, has dropped more steeply than
expected. Use the 4-step process to demonstrate the effect of this
change in the market for electric vehicles. Explain why you have
drawn the change you have.
3. Has there been a change...

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