Discussion:
1. Consider a market with the following supply (Qs) and demand (Qd) curves:
Qd= 200-2p
Qs=25
At the market equilibrium, what is the value of consumer surplus?
a. 0
b. 156.25
c. 625
d. 3750
e. Infinite
2. Consider a market with the following supply (Qs) and demand (Qd) curves:
Qd= 12-0.2p
Qs=p
At the market equilibrium, what is the value of total surplus?
a. 10
b. 50
c. 100
d. 200
e. 300
3. Consider a market with the following supply (Qs) and demand (Qd) curves:
Qd= 200-2p
Qs=25
Suppose the government imposes a tax of 15 dollars for each unit sold on buyers. For each unit sold, what is the amount received and kept by producers in the post tax equilibrium?
a. 170
b. 150
c. 145
d. 25
e. None of the above
4. Consider a market with the following supply (Qs) and demand (Qd) curves:
Qd= 200-2p
Qs=25
Suppose the government imposes on the buyer a tax of 15 dollars for each unit sold. What is the total tax revenue raised and deadweight loss following the imposition of the tax?
a. Revenue = 15, DWL=0
b. Revenue = 15, DWL = 375
c. Revenue = 375, DWL = 0
d. Revenue = 375, DWL = 375
e. None of the above
5. Consider a labour market in which the supply curve is given by: w= 100 + Ls (where w is the wage rate and Ls is the quantity of labour supplied). Further, assume that the demand for labour is given by w = 400 - 2Ld (where w is the wage rate and Ld
is the quantity of labour demanded). Assume that the government imposes a minimum wage of 250. In this case the resulting deadweight loss is equal to:
a. 0
b. 312.5
c. 625
d. 937.5
e. None of the above
6. Consider a labour market in which the supply curve is given by: w= 100 + Ls (where w is the wage rate and Ls is the quantity of labour supplied). Further, assume that the demand for labour is given by w = 400 - 2Ld (where w is the wage rate and Ld?is the quantity of labour demanded). Assume that the government imposes a minimum wage of 150. Following the imposition of the minimum wage consumer surplus is equal to:
a. 0
b.5625
c. 10000
d. 15000
e. none of the above
7 Assume that the demand curve and supply curves for computer tablets is given by the following:
Qd= 10000 - 2p
Qs= 4p - 200
If the government imposes a tax of 60 that must be paid by the seller the total amount of tax revenue raised is equal to:
a. 0
b. 60
c. 6520
d. 391200
e. 396000
8. The supply curve of LNG, a substitute for petrol is given by the following: p=100+Qs.The demand curve for LNG is given by p=120-3Qd. Assume that the government has decided that one way to reduce greenhouse gas emissions is to encourage the use of ethanol. As a result, the government provides a subsidy of 40 to suppliers. Following the imposition of the subsidy, what is the new equilibrium price?
a. 40
b. 45
c. 65
d. 75
e. 105