Exam 5: Using Supply and Demand

Refer to the table shown that depicts a third-party payer market. What is the cost of this program to the third-party if a $1 co-pay is established? Price Quantity Demanded Quantity Supplied \ 0 1,200 0 \ 1 600 150 \ 2 300 300 \ 3 0 450 \ 4 0 600 \ 5 0 750 \ 6 0 900 \ 7 0 1,050

Which of the following would be the most likely effect of a 75 percent tax on punitive awards by juries?

Many state governments support higher education through subsidies.(A subsidy is like a negative excise tax).Consider the following supply and demand for college education at State U,which shows the equilibrium that would prevail without subsidies: annual tuition is $20,000 with Q₀ enrolled students.Suppose the state provides a $10,000 per year subsidy paid to State U for each student enrolled.What impact will this subsidy have on the equilibrium tuition level and number of enrolled students? Explain.

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $6 per pill, total expenditures under the third-party payer system will be:

Suppose that initially, supply is given by the equation Qs = 4P − 16. If, as a result of higher production costs, the quantity supplied decreases by 4 at every price, the new supply equation would be:

Refer to the graph shown. With a tariff on lumber imported from Canada of $6 per ton, the revenue the government would collect from the import of lumber would be:

Refer to the table shown that depicts a third-party payer market. What is the price the supplier will charge for the quantity consumers demand if a $1 co-pay is established? Price Quantity Demanded Quantity Supplied \ 0 1,200 0 \ 1 600 150 \ 2 300 300 \ 3 0 450 \ 4 0 600 \ 5 0 750 \ 6 0 900 \ 7 0 1,050

A decrease in price and an indeterminate change in quantity are consistent with a:

When the person who chooses how much to purchase doesn't have to bear the full cost, the quantity demanded tends to be higher.

Refer to the following graphs. In the early 1990s, mounds of newspapers and worthless plastic piled up at recycling centers. As the nation's economy continued to grow, increased demand eliminated the mounds and turned them into shortages. In the mid-1990s, as recycling became more popular, the mounds of recycled materials returned. What graph best depicts these events on the market for recycled materials?

What is a price ceiling? What is a price floor? Give a real world example of each.What happens to the relationship between quantity demanded and the quantity supplied with an effective price ceiling? What happens to the relationship between quantity demanded and the quantity supplied with an effective price floor? What is likely to happen if there is a shortage of rent controlled apartments? What is likely to happen if there is a surplus of price supported grain?

The market for tennis racquets in a small town is represented by the following demand and supply equations: Q_D = 200 - P Q_S = -50 + P Calculate the following (treat each point as a separate scenario): (a)The equilibrium price and quantity. (b)The equilibrium price and quantity after a $10 tax on the supplier. (c)The equilibrium price and quantity after a $10 tax on the consumer. (d)The equilibrium price and quantity after the government sets a price ceiling of $100. (e)The equilibrium price and quantity after the government sets a price floor of $110. (f)The equilibrium price and quantity after the government sets a quantity restriction of 75 units and an increase in the demand for racquets by 50.

What is a third-party payer market? Give an example.

In the 1990s and into the fist decade of the 2000s,the war in Iraq reduced that nation's petroleum production and exports to levels that are well below pre-war levels.At the same time as a result of the rapid growth of the Chinese economy,world demand for petroleum products increased significantly.Both events had significant impacts on world oil prices.How would the simple supply and demand model apply to this case?

Tariffs increase equilibrium price and quantity.

Given the equations for demand and supply: Qd = 48 − 4P and Qs = 4P − 16, respectively, the quantity demanded equals the quantity supplied at a price of:

A surplus of a good could possibly be eliminated by:

Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price ceiling of $50 per ton. What would be the resulting market distortion?

U.S. baby boomers are beginning to retire and withdraw their savings for retirement. What effect should we expect this to have on equilibrium price and quantity of financial assets?

Stricter environmental regulations and increased demand for energy have caused an increase in the demand for relatively clean natural gas. In the last several years, improved extraction technologies and new discoveries have increased the availability of natural gas. What has been the net effect on price and quantity for natural gas?