--%>
Assignment Help - homework help

Programs exchanged in the market

For the question below, utilize the given information. The market for gizmos is competitive, with an increasing sloping supply curve and a downward sloping demand curve. With no govt. intervention, the equilibrium price is $25 and the equilibrium quantity is 10,000 gizmos. Consider the given programs of government intervention:

Program I: The govt. obliges an excise tax of $2 per gizmo
Program II: The govt. gives a subsidy of $2 per gizmo for gizmo producers.
Program III: The govt. obliges a price floor of $30.
Program IV: The govt. obliges a price ceiling of $20.
Program V: The govt. permits no more than 8,000 gizmos to be generated.

Which of such programs would lead to a less than 10,000 units exchanged in the market? Explain briefly.

E

Expert

Verified

Program I: The excise tax will raise the price consumers pay to a level above $25, and lower the price producers obtain to a level beneath $25; therefore, the quantity exchanged in the market will fall beneath 10,000 units.

Program II: With the subsidy, the price producers obtain will rise to a level above $25; the price consumers obtain will fall beneath $25. Therefore, the equilibrium quantity exchanged will increase to a point above 10,000.

Program III: With price floor of $30, consumers will purchase less than 10,000 gizmos; therefore fewer than 10,000 will be substituted in the market.

Program IV: With price ceiling of $20, producers will provide less than 10,000 gizmos; therefore fewer than 10,000 will be substituted in the market.

Program V: By govt. fiat, less than 10,000 gizmos will be substituted.

   Related Questions in Business Economics

  • Q : How will the goods and services be

    How will the goods and services be produced?

    		•
  • Q : Economic Why are democratic regimes

    Why are democratic regimes more conducive to economic growth than dictatorship

    		•
  • Q : Summary of what can cause an increase

    Illustrate a summary of what can cause an increase in demand?

    		•
  • Q : Determine equilibrium prices market

    The new supply and demand curves within University City were S0 and D0, before the county commission imposed a $3 per six-pack excise tax upon beer. The new equilibrium quantities of six-packs sold per month and equilibrium prices, respectively,

    		•
  • Q : U.S. exports create a demand for

    True or false? “U.S. exports create a demand for foreign currencies; foreign imports of U.S. goods generate supplies of foreign currencies.”  Explain.

    		•
  • Q : Tax revenues to reduce rate of inflation

    Explain how government might manipulate its expenditures and tax revenues to reduce rate of inflation?

    		•
  • Q : Perfect competition leads the economic

    The perfectly competitive market structure benefits consumers since: w) firms do not generate goods at the lowest possible price within the long run. x) firms are forced through competitive pressure to be as efficient as possible. y) firms add a much

    		•
  • Q : Activities of speculators in long turn

    The activities of speculators tend to, in the long run: (w) decrease the volatility of prices. (x) attract legal attention resulting in imprisonment. (y) increase the level and volatility of prices. (z) yield tremendous profits and raise costs to cons

    		•
  • Q : Government expenditures on goods and

    Explain Government expenditures on goods and services and transfer payments?

    		•
  • Q : Initial systematic and popular

    The initial systematic and popular description of capitalism was explained in: (1) Sir Thomas Mun’s England’s Treasure by Foreign Trade. (2) Joseph A. Schumpeter’s Capitalism, Socialism, and Democracy. (3) John Maynard Keynes’

    		•