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16:19 4月30日周二 Elevating the Educat... Renweb Account Asksia APP Microeconom...
May 2, 2024
16:19 4月30日周二 Elevating the Educat... Renweb Account Asksia APP Microeconomi... me equindrum price anu iowers the equindrium quantity e The change in consumer surplus due to a price increase is the area between the demand curve and the new and old supply curves, above the original equilibrium price f Complementary goods have a negative cross-price elasticity, meaning that an increase in the price of one good leads to a decrease in the demand for the other g. With a cross-price elasticity of -2 , a 10%10 \% increase in the price of muffins leads to a 20%20 \% decrease in the quantity demanded of coffee. The new equilibrium quantity is 100 cups −20%-20 \% of 100 cups, which is 80 cups Key Concept Price Floor and Surplus Explanation A price floor set above the equilibrium price causes a surplus Type a question...
Answer
The change in consumer surplus due to a price increase is represented by the area between the demand curve and the new and old price levels, above the original equilibrium price.
Solution
a
Consumer Surplus: Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay
b
Change in Consumer Surplus: When the price increases, the consumer surplus decreases. This change is represented graphically by the area between the demand curve and the horizontal lines at the new and old prices, above the original equilibrium price
c
Calculation: The change in consumer surplus can be calculated as the area of the triangle formed by the demand curve and the two horizontal lines representing the old and new prices. If the demand curve is linear, the area of the triangle is 12×base×height\frac{1}{2} \times \text{base} \times \text{height}, where the base is the change in quantity and the height is the change in price
Key Concept
Consumer Surplus and Price Changes
Explanation
A price increase leads to a decrease in consumer surplus, which is graphically shown as the area between the demand curve and the new and old prices, above the original equilibrium price.
Answer
Complementary goods have a negative cross-price elasticity of demand.
Solution
a
Cross-Price Elasticity of Demand: Cross-price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good
b
Complementary Goods: For complementary goods, the cross-price elasticity of demand is negative, meaning that an increase in the price of one good will lead to a decrease in the demand for the complementary good
Key Concept
Cross-Price Elasticity for Complementary Goods
Explanation
An increase in the price of one good leads to a decrease in the demand for its complement, as indicated by a negative cross-price elasticity of demand.
Answer
A 10% increase in the price of muffins leads to a 20% decrease in the quantity demanded of coffee, resulting in a new equilibrium quantity of 80 cups.
Solution
a
Cross-Price Elasticity Calculation: The cross-price elasticity of demand is calculated as the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good
b
New Equilibrium Quantity: With a cross-price elasticity of -2, a 10% increase in the price of muffins leads to a 20% decrease in the quantity demanded of coffee. If the initial equilibrium quantity was 100 cups, a 20% decrease results in 80 cups
Key Concept
Cross-Price Elasticity Impact on Quantity Demanded
Explanation
The cross-price elasticity of demand indicates how the quantity demanded of one good is affected by a price change in another good, with a negative elasticity representing complementary goods.
Answer
A price floor set above the equilibrium price causes a surplus in the market.
Solution
a
Definition of Price Floor: A price floor is a minimum price set by the government for a good or service, which is intended to ensure that the market price does not fall below a level that would threaten the financial viability of producers of the good or service
b
Surplus Creation: When a price floor is set above the equilibrium price, it results in a surplus because the quantity supplied exceeds the quantity demanded at that price
Key Concept
Price Floor and Market Surplus
Explanation
A price floor set above the equilibrium price leads to a surplus, as it causes the quantity supplied to be greater than the quantity demanded.
16:2016: 20 4月30日周二 Micro Unit2 敞观。 ap18-frq-calc... ap21-frq-calc... ap19-frq-calc... Peterson's Ap... 微积分简答题.. Micro Unit2 67. (2015-3) The graph below shows the market for widgets. The government is considering intervening in this market. (a) Calculate the total producer surplus at the market equilibrium price and quantity. Show your work. (b) If the government imposes a price floor at \16,isthereashortage,asurplus,orneither?Explain.(c)Ifinsteadthegovernmentimposesapriceceilingat$12,isthereashortage,asurplus,orneither?Explain.(d)Ifinsteadthegovernmentrestrictsthemarketoutputto10units,calculatethedeadweightloss.Showyourwork.(e)Assumethepricedecreasesfrom16, is there a shortage, a surplus, or neither? Explain. (c) If instead the government imposes a price ceiling at \$12, is there a shortage, a surplus, or neither? Explain. (d) If instead the government restricts the market output to 10 units, calculate the deadweight loss. Show your work. (e) Assume the price decreases from \20 20 to $12\$ 12. (i) Calculate the price elasticity of demand. Show your work. 33/3433 / 34 (ii) In this price range, is demand perfectly elastic, relatively elastic, unit elastic, relatively inelastic, or perfectly inelastic?
Answer
(a) The total producer surplus at market equilibrium is the area of the triangle below the equilibrium price and above the supply curve. (b) There is a surplus. (c) There is a shortage. (d) The deadweight loss is the area of the triangle that represents the lost surplus due to the restriction of output. (e)(i) The price elasticity of demand is calculated using the midpoint formula. (e)(ii) Demand is relatively elastic in this price range.
Solution
a
To calculate the total producer surplus at market equilibrium, identify the area of the triangle formed by the supply curve, the price axis, and the vertical line at the equilibrium quantity. The formula for the area of a triangle is 12×base×height\frac{1}{2} \times \text{base} \times \text{height}
b
A price floor set at $16, if above the equilibrium price, will result in a surplus because the quantity supplied will exceed the quantity demanded at that price
c
A price ceiling set at $12, if below the equilibrium price, will result in a shortage because the quantity demanded will exceed the quantity supplied at that price
d
To calculate the deadweight loss when the market output is restricted to 10 units, find the area of the triangle formed by the demand and supply curves and the vertical line at the restricted quantity. The formula for the area of a triangle is 12×base×height\frac{1}{2} \times \text{base} \times \text{height}
e(i)
The price elasticity of demand is calculated using the midpoint formula: Ed=Percentage change in quantity demandedPercentage change in priceE_d = \frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}}. Use the given prices and the corresponding quantities to calculate the percentage changes
e(ii)
Based on the calculated price elasticity of demand, determine whether demand is perfectly elastic, relatively elastic, unit elastic, relatively inelastic, or perfectly inelastic. If |E_d| > 1, demand is relatively elastic
Key Concept
Producer Surplus, Price Floor, Price Ceiling, Deadweight Loss, Price Elasticity of Demand
Explanation
Producer surplus is the area above the supply curve and below the market price. A price floor above equilibrium creates a surplus, while a price ceiling below equilibrium creates a shortage. Deadweight loss is the loss of economic efficiency when the equilibrium outcome is not achieved. Price elasticity of demand measures how much the quantity demanded responds to a change in price; if it's greater than 1, demand is relatively elastic.
if the price elasticity lower than 1
Answer
When the price elasticity of demand is lower than 1, the demand is considered inelastic, meaning that the quantity demanded is relatively unresponsive to price changes.
Solution
a
Definition of Price Elasticity of Demand: The price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good, calculated as the percentage change in quantity demanded divided by the percentage change in price
b
Inelastic Demand: When the price elasticity of demand is lower than 1, it indicates that the percentage change in quantity demanded is less than the percentage change in price. This is known as inelastic demand
c
Implications of Inelastic Demand: - Consumers are less sensitive to price changes, and a price increase would lead to a smaller percentage decrease in quantity demanded. - Total revenue for sellers would increase when prices are raised because the loss in sales volume is outweighed by the higher price per unit. - The formula for price elasticity of demand is Ed=%ΔQd%ΔPE_d = \frac{\%\Delta Q_d}{\%\Delta P}, where EdE_d is the price elasticity of demand, %ΔQd\%\Delta Q_d is the percentage change in quantity demanded, and %ΔP\%\Delta P is the percentage change in price
Key Concept
Inelastic Demand
Explanation
Inelastic demand occurs when the price elasticity of demand is lower than 1, indicating that consumers are not very responsive to changes in price. This has implications for revenue and consumer behavior.
16:2816: 28 4月30日周二 Micro Unit2 敞观。 ap18-frq-calc... ap21-frq-calc... ap19-frq-calc... Peterson's Ap... T. :-: 整 Δ\Delta Θ\Theta ○ (अ) 0 68. (2012-3) Sugar is freely traded in the world market. Assume that a country, Loriland, is a price taker in the world market for sugar. Some of the sugar consumed in Loriland is produced domestically while the rest is imported. The world price of sugar is $2\$ 2 per pound. The graph below shows Loriland's sugar market, and PW\mathrm{P}_{\mathrm{W}} represents the world price. (a) At the world price of \2perpound,howmuchsugarisLorilandimporting?(b)SupposethatLorilandimposesaper−unittariffonsugarimportsandthenewdomesticpriceincludingthetariffis2 per pound, how much sugar is Loriland importing? (b) Suppose that Loriland imposes a per-unit tariff on sugar imports and the new domestic price including the tariff is \4 4. (i) Identify the new level of domestic production. (ii) Calculate the domestic consumer surplus for Loriland. You must show your work. (iii) Calculate the total tariff revenue collected by the government. You must show your work. (c) Given the world price of \$2, what per-unit tariff maximizes the sum of Loriland's domestic consumer surplus and producer surplus?
Answer
Loriland is importing the quantity of sugar that is the difference between the quantity demanded and the quantity supplied at the world price of $2. The new level of domestic production, domestic consumer surplus, total tariff revenue, and the per-unit tariff that maximizes the sum of domestic consumer surplus and producer surplus cannot be calculated without the accompanying graph or additional data.
Solution
a
To determine the amount of sugar Loriland is importing at the world price of $2 per pound, we need to look at the difference between the quantity demanded and the quantity supplied at that price. Without the graph or data, we cannot provide specific quantities
b(i)
The new level of domestic production after imposing a per-unit tariff that increases the domestic price to 4wouldbehigherthantheproductionattheworldpriceof4 would be higher than the production at the world price of 2. The exact quantity cannot be determined without the graph or data
b(ii)
The domestic consumer surplus is the area below the demand curve and above the price level up to the quantity demanded. To calculate it, we need the demand curve equation or graph. Without this information, we cannot calculate the exact consumer surplus
b(iii)
Total tariff revenue is calculated by multiplying the per-unit tariff by the quantity of imports after the tariff is imposed. Without the graph or data, we cannot calculate the exact tariff revenue
c
To find the per-unit tariff that maximizes the sum of domestic consumer surplus and producer surplus, we would need to analyze the changes in these surpluses as the tariff varies. This requires detailed information on Loriland's supply and demand curves for sugar
Key Concept
Import Quantity, Consumer Surplus, Tariff Revenue, and Surplus Maximization are key concepts in analyzing the impact of tariffs in a price taker country.
Explanation
The import quantity is the difference between domestic demand and supply at the world price. Consumer surplus is the area below the demand curve and above the price, up to the quantity demanded. Tariff revenue is calculated by the tariff rate times the quantity of imports. Maximizing the sum of consumer and producer surplus involves finding the tariff rate that balances the gains and losses to domestic stakeholders. Without specific data or a graph, these values cannot be precisely calculated.
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