Exam 3: Using Supply and Demand to Analyze Markets

Suppose the market for soda is represented by the following supply and demand equations: Q^S = 35P - 39.75 and Q^D = 10.25 - 5P, where P is price per bottle and Q measures bottles per second.

In the market for used cars, the demand and supply equations are given by Q^D = 12,000 - 0.4P and Q^S = 0.1P + 5,000, where P is the price per car and Q measures the quantity of cars. What happens at a price floor of $20,000?

Use the following to answer questions 29-31: Figure 3.10 -(Figure 3.10) If the government mandates a price floor of $750, the area of consumer surplus:

The demand for a good is given by Q^D = 750 - 0.4P. What is consumer surplus at a price of $80?

Use the following to answer questions 39-40: Figure 3.14 -(Figure 3.14) The size of the tax is:

The supply and demand for almonds are Q^D = 80 - 10P and Q^S = 10P, where P is price per bag and Q measures hundreds of bags per day.

Many states have minimum price laws for cigarettes. Assume that the demand equation for cigarettes is Q^D = 4,000 - 300P, while the supply equation is Q^S = -1,000 + 200P, with quantity in thousands of packs. Assume that state governments replace the $12 price floors with a tax of $9 per pack, resulting in the same number of packs sold as under the price floor. The price floor would lead to a deadweight loss of $_____; the $9 tax would lead to a deadweight loss of $_____.

Use the following to answer question: Figure 3.16 -(Figure 3.16) Which of the following statements is (are) TRUE?

In a small country, the demand and supply of kidneys are represented by Q^D = 10,000 - 0.25P and Q^S = 0.5P + 4,000. The number of kidneys transplanted at a price floor of $10,000 would be _____.

At the equilibrium price of $10, the elasticity of demand and supply are -0.9 and 1.10. If the government institutes a tax of $1 per unit, sellers will receive _____ and consumers will pay _____.

Use the following to answer question: Figure 3.18 -(Figure 3.18) Answer the following questions:

Use the following to answer questions 22-23: Figure 3.8 -(Figure 3.8) Suppose the government mandates a price ceiling of $3 per pound. Producer surplus decreases from:

The demand and supply curves for Fuji apples are given by Q^D = 50 - 6P and Q^S = 4P - 2, where P is price per bag and Q is in thousands of bags. What are consumer surplus and producer surplus at the equilibrium price?

The deadweight loss (owing to a price ceiling) increases as demand becomes more _____ and supply becomes more _____.

Consumer surplus can be calculated as:

Use the following to answer questions 20-21: Figure 3.7 -(Figure 3.7) Suppose the government mandates a price ceiling of $8 per pound. Consumer surplus:

Suppose the demand and supply curves for shampoo are given by Q^D = 18 - 5P Q^S = -3 + 2P where Q^D is the quantity of shampoo demanded (in thousands of bottles), Q^S is the quantity supplied, and P is the price of shampoo (in dollars per bottle). a. Calculate the equilibrium price and quantity, b. Calculate the consumer surplus at the equilibrium price.

Assume that the demand for disposable digital cameras is Q^D = 6 - 0.33P. Supply is given as Q^S = 0.67P. The equilibrium price (P_B) and quantity (Q_B) once a tax of $1 per unit is applied will be _____. (Please round your answer to two decimal places.)

Assume that the demand for selfie sticks is Q^D = 6 - 0.5P. Supply is given as Q^S = P. The deadweight loss due to a quota of two sticks is $_____.

Use the following to answer question: Figure 3.2 -(Figure 3.2) If the price per bag of grapefruit increases from $6 to $8, producer surplus changes by: