Problem set 3 - If the market equilibrium price is $25

Question # 00541106 Posted By: dr.tony Updated on: 06/06/2017 03:05 AM Due on: 06/06/2017
Subject Economics Topic Microeconomics Tutorials:
Question
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Problem set 3
Due 5/30
You are encouraged to work in groups comprising of not more than three individuals. Only one
submission per group is required. Clearly write each group member’s name. STAPLE ALL YOUR
PAGES!!
1. Refer to the figure below: 

a. If the market equilibrium price is $25, how much is total producer surplus in this market? b.
c. If the market equilibrium price is $35, how much is total producer surplus in this market?
If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers
supplying units at the initial $25 price?
If the market equilibrium price rises from $25 to $35, how much is the producer surplus for the producers entering the
market after the price increase? d.
2. Refer to the figure below: a.
b.
c. 3. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. What is the total consumer
surplus at the NEW equilibrium price?
Suppose supply shifts such that producers wish to supply 12 more units at every price. What is the total producer surplus
at the NEW equilibrium price? (disregard the demand shift in (a) for this part.)
Suppose we are back to the original figure. Calculate the deadweight loss if the government imposes a price floor of $21. Refer to this figure: Suppose the government imposes a $3 tax per unit on this good.
a.
b.
c.
d.
e.
f.
g. What price will consumers pay for the good after the tax is imposed?
What price will sellers receive after the tax is imposed?
How many units of this good will be bought and sold after the tax is imposed?
How much is the consumer surplus after the tax is imposed?
How much is the producer surplus after the tax is imposed?
What is the amount of the tax revenue collected?
Calculate the deadweight loss of this tax. 4. The graph depicts the market for plastic: a.
b.
c.
d.
e.
5. Briefly explain why might there be a divergence between social and private costs of plastic as shown in the figure.
Without any government regulation, how much plastic will be produced?
Without any government regulation, what price will the firm charge per unit of plastic?
What is the socially optimal quantity of plastic?
Briefly explain why the socially optimal quantity of plastic is not zero units. Consider the following goods: a.
b. c. a. a fish fillet served at a restaurant
b. fish in the ocean
c. exotic fish in a huge aquarium in a privately-owned building
Which of these is the best example of a private good? Briefly explain.
Which of these is the best example of a public good? Briefly explain.
Which of these is the best example of a common resource? Briefly explain.
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Tutorials for this Question
  1. Tutorial # 00538239 Posted By: dr.tony Posted on: 06/06/2017 03:06 AM
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