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A market is described by the following supply and demand curves:
QS = 2P
QD = 300 – P
a Solve for the equilibrium price and quantity.
b If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop?What are the price, quantity supplied, quantity demanded and size of the shortage or surplus?
c If the government imposes a price floor of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded and size of the shortage or surplus?
d Instead of a price control, the government levies a tax on producers of $30. As a result, the new supply curve is QS = 2(P – 30).
Does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded and size of the shortage or surplus?
petrol. The government imposes a $0.50 tax for each litre of petrol sold.
a Should this tax be imposed on producers or consumers? Explain carefully using a supplyand-demand diagram.
b If the demand for petrol were more elastic, would this tax be more effective or less effective
in reducing the quantity of petrol consumed? Explain using both words and a diagram.
c Are consumers of petrol helped or hurt by this tax? Why?
d Are workers in the oil industry helped or hurt by this tax? Why
What is kaldor compensation principle.
How it is uesd to resolve pareto non comparability?
How ot os different from hick's compensation principle?
proportions. The marginal cost equation for the beef-hide product package is given by
MC = 30 + 5Q
The demand and marginal revenue equations for the two products are:
BEEF
HIDES
P = 60 – 1Q
P = 80 – 4Q
MR = 60 – 2Q
MR = 80 – 4Q
What prices should be charged for beef and hides? How many units of the product package
should be produced?
Discuss how the idea of rationality is used in the indifference curve theory of consumer behaviour
discuss how the idea of rationality is used in the indifference curve theory consumer behaviour
True or False?
There are no quasilinear tastes that have constant elasticity of substitution.
True or False?
There are no quasilinear tastes that have elasticity of substitution equal to 1 everywhere.
True or False?
Tastes for perfect complements are both homothetic and quasilinear.
True or False?
Tastes for perfect substitutes are both homothetic and quasilinear.
#340153 on Dec 2023