Exam 3: Using Supply and Demand to Analyze Markets

(Figure: Market for Good X I) Which of the following statements is (are) TRUE? I. A tax on buyers of $3 per unit raises the price buyers pay to $6. II) A tax on sellers of $3 per unit raises the price buyers pay to $6. III) With a tax on sellers of $3 per unit, the share of the tax paid by buyers is 67%.

(Figure: Price and Quantity V) Answer the following questions. a. For demand curve D₁, what is the level of consumer surplus at a price of $40? b. For demand curve D₂, consumer surplus is $6,400 at a price of $40. What is the demand choke price?

If the legal burden of a tax is passed from sellers to buyers:

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). The consumer surplus at the equilibrium price is ____.

The supply and demand for organic peanut butter are Q^D = 70 - 5P and Q^S = 5P, where P is price per jar and Q is in hundreds of jars per day. The government decides to impose either a $1 supply subsidy or a price floor equal to $7.50. The producer surplus associated with the price floor would be _____.

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

The market for cookies is represented by the following supply and demand conditions: Q^D = 1,000 - 200P and Q^S = 400P - 200, where P is price per box of cookies and Q measures boxes per day. a. Solve for the equilibrium price and quantity and then use supply and demand curves to illustrate your answer. b. Suppose the government places a quota of 500 boxes per day on cookies. Solve for the equilibrium price and quantity and then use supply and demand curves to illustrate your answer. c. Calculate consumer surplus before and after the quota. d. Calculate producer surplus before and after the quota. e. Calculate the deadweight loss from the quota.

In the market for cotton, the quantity demanded and quantity supplied are expressed mathematically as Q^D = 400 - 250P and Q^S = 250P - 100, where P is the price per pound of cotton and Q measures pounds of cotton. Suppose the government sets a price ceiling of $0.50 per pound of cotton. The consumer surplus with the price ceiling is:

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 _____.

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). The equilibrium price in this market is ____ and the equilibrium quantity is ____.

(Figure: Price and Quantity V) For demand curve D₁, the level of consumer surplus at a price of $40 is:

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). Calculate producer surplus at the equilibrium price using calculus.

(Figure: Market for Tickets I) Which of the following statements is (are) TRUE? I. Consumer surplus after the tax is area A + B. II) Producer surplus before the tax is D + E + F. III) Consumer surplus before the tax is A + C + E. IV) The size of the tax is $0.50, raising $170,000 in tax revenue.

The demand curve for pizza on the college campus is represented by Q^D = 1,000 - 40P. At a price of $14, the total consumer surplus for the college campus would be $_____.

Explain why taxes cause deadweight losses.

Suppose that the demand curve for an advanced technology product for businesses is given by P =10,000 - 4Q³ and supply is P = 2,000 + 4Q³. The consumer surplus at the equilibrium price is ____.

(Figure: Market for Tickets II) The government tax revenue is: ​ ​

(Figure: Market for Tickets II) Before the tax, producer surplus is ____ and after the tax, producer surplus is ____.

To calculate consumer surplus for the case when a quota is in place:

(Figure: Market for Ammunition I) Assuming the government imposes the quota of 200 boxes/week, the consumer surplus is: