Revised_Ch01_solutions

Revised_Ch01_solutions - -I,—_n—__ “DEPzigé-‘Z—...

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Unformatted text preview: -I,—_n—__ “DEPzigé-‘Z— ; i, “30 7.. '0.8 I k?) ngkffi' Pawanuem '3: 31163:: $2356 11in m N: 621 453%) =c1‘z‘3c3 Amb my 3 3430* we :30 ATLJQAL Rev 5 $4395? #5627 r —@ CL) “0 j, £3515 “49% 0“ Commagn flan dad-tear 041681.qu QM__ PMEL 2350 ;> 655 2 W00) @b'JQECU > X} =7 GMK flit umfiétgé Em ‘9 Q3 : ‘lLffl-L/625)WCO _ 9 I ._ +5561;ng flffléz. LE1ng ._ A6 2% 5W5 W: ?S 3* 350x560 D +144 ((200 4g) 350:? Q "ti-Z53!) 7150 OWL : “:Cigzmflffi’?) ((6251350) 3 Mai—E C, T1143. DFUL Magi; 13 q X05; (CS—Id . m 05% burs-u.» g5“ f h. as 71$pr [PG/I53 *3 _ VE'Cfiqulmaé'flK ~33 30m OW 1% m: LQM ff “jam. y Za wE‘s "(its éL {/UérL/Zéf 557% 2 Eff flfi his»)? VQAS . x _ 61mm; \ a; {7&5 : *0. £206 :7 d%‘>: 333%? (fig?) ' a? . =19. 50‘? $6“ E? :5 Ge! : 3241* 0.67}? (gm ng r—*_ ism CKB’FIT 71‘ 5 c "J r _'- Ar )9 {W G 9%: 052/551 13:)" 3 H21 0.4065”? flammk E) ;’Lfm2m[ WW $1 a falmm LM-f . ‘QJLI‘S Wat-fl“ ifléi/éaoh' 5773 h E far U gag «$13 and QMM Gd :Qs [l1 —0.0E+(R; +24”) .2 #0 If??? 72;, :> P5 = {Pia “9557953777?Z = EGO : i‘fiaz'qm ' ' Ravi : #621 if 51‘71/§?;L[;L§;]«O fizgfiS’S/T fifiwz “405% 5. a) To find P, set demand -— supply: Sflflflfl — lUflP r- IGDP- seen. P 23D. To find Q, sultstitute P =' 28E] into either the demand or supply equation: I sense - morass}. Q — sauna P 554- 5. E h 12m: ‘51 Consumer surplus [area A] is UHSI‘JG — ESE!) at Elflflfl = 52,42flflflfl Producer surplus {area B} is 132(280 - 60} x Elmt} = Sl42fififlfl. Total surplus [consumer surplus plus producer surphrs} is $4,346,00fl. b] At P -— iflflfl, producers produce 0 = Iflqlflfl} - fififlfl = HJKJIU. Therefore, consumer could only hay I4,Uflfi units although more is demanded. P ifiou S L Eb isn- {Lao ‘ in ‘0 mm Q Consumer surplus (areas AB) is UHSUG — 36H] x l4,flfitl -| [3613 - 2W} x 14,0130 '— $3.22fl,fiflfl. Consumer surplus has increased by $Bflflfiflfl. Producer surplus {area C} is L’EIIIZUH - GB) 1-: HUGE) = SQBflflflfl. Producer surplus has decreased by SLMUfiGfl. The total change in welfare {area D} s— change in C5 + change in PS - = Bflflfiflfl — LHUfiDG = -Sfi4{i__flflfl. Therefore, the dcadweight loss- Sfiélflfiflfl. c} A1 a price floor ofSBufil. consumers hug; Q = Silfiflfl — lflflfiidfl) = 14,{fldfl units. 1;: $50: 8 $3.. I F we b “I‘m 1am:- Q At a price floor of $36!}: producers sell Q r lililfitfifl) — firflflfl— Ellfllflfl units. The govemnient buys moon units, the portion not sold in consumers. Consumer surplus [area A) is L’BILEDCI — 360} x i4,DflU-— SQBDJJUG. Consumer surplus has decreased by $1,44[l__flf}{l. Producer surplus {areas ECU} is 1.*'2{36E} — 6(1) x 30,1300 — $4,5flflfilflfil. Producer surplus has increased by SEJJHUJJQU. The government would have to spend 364:] x lofififl '— sarcoma (areas CHIEF}. The total change in welfare — change in CS 'r- change in PS — government spending = — l,44il,[lGCI I 103135109 SJErDiUCID = — SSJZfififlU. Thus; the deadweight loss { areas Clair) is $5,12Qflflfl d} At a price floor arsseu, consumers buy Q- sonnc — worsen) = 14,9430 units. ? . Iii-m:- Q Consumer surplus {area A) is HEEUU - sea) at 14,GUD — $98fififlfl. Consumer surplus has decreased by Sifldflfiflfi. Producer surplus {areas BC) is (3612} — EDD) x l4.flflt’l + IKEHUU — as} x races = 53,22fiyflflfl. Producer surplus has increased by Sfiflflyflflt}. The total change in welfare {area D) - —1__44t},t}{lfl -‘- Sflflfiflflfl science. The deatiweight loss is $64Gfifl'fl. ej With the $2t} tax. the price consumers pay; PC, is no longer equal to the price producers receive P11, Instead PC = Pp +- 212]. 15.90:: Q The new 0 = 21,9:30 and prices are Found by solving the following: o — scene — tactic, o -— teem.-— aces, PC = as 1 20. o — saene — instep so} — aspen — toan To find P: lflflPp acne 43,{JUU - IDGPP. P1:- = $2511 Q Jeers. syeae literate) — aces — a l ,eee units. is; = P]. + an sass. r‘titematiyely the new Q and prices can by found by shifting the supply upward by $35) and finding the new intersection with demand. Did supply: Q — ltJDF — a,er or P -— tit} + ertlt} New supply' P — bf! t- Qr'lDCI + 2U — EU 't Qiltilfl Q - 5t}__t}tl r IUDP —' Sfliflflfl — WWW + Qr‘lflfl}. Q — Elfiflt} F {for mnsumers} — 313 + Qr‘ltltl = 3t) + {Elfiflmrtflfi — 32911). Note: The burdert ot‘the tax is equally borne by consumers and producers. 'l'his is not always the case. The price elasticity of demand and the price elasticity of supply determine whether consumers or producers hear the burden of the tax. Consumer surplus {area A} is tr2[5t}{l — ace) 7»: Zlyflflfl— $2,2U5fitlf). Consumer surplus has decreased by $235,1flflfl. Producer surplus {area C) is le’2[2?fl - GD) )1 2 i ,C'IDU = $2,2{J51U0fl Producer surplus has decreased by . Elitlfitt The got-'ernntent receives 2t] a 2 LUCIE! =-' $42G,DUU {area B). The total change in welfare — change in CS + change in PS - gt'tvernment revenues = ~215,I3I3It3 + —2] fijlflfl + 423ml} = —S Iflfiflfl. 'I'he deadtveight loss is Slflcflflfl {area D). + 6. a) At $5, domestic producers sell Q -— 313? - IUD — 30(5) u ltJIU - 5t) units. F‘ ‘15 . A . 'A a v 1.1:: '51:: um 9‘ Imports are 3513 units. Consumer surplus [areas AHCUFZF} is 1.5285. — x 413G —' SdJJUfl. Producer surplus [area (3} is NEH:- — 3 H3)”: 5E} — sane? The total surplus is $4,041.63. b} 33.139: Consumers on}; Q —- EGG — 2913 = see — 213(9) = 32%?! units and domestic producers sell Q = 391’ a Hill 7 313(9) — lDC' = Ht] units. Imports islSfl units [32D — 13:3]. Consumer surplus [ areas AB) is MEGS — ‘3) x 320-— $1569. Consumer surplus has decreased by $1340 (areas CUFF). Producer surplus [areas [3(3) is [53(5) - 3 H3} x lTI‘CI— S43] .63. Producer surplus has increased by 34449 {area {I}. l[iewernment revenue (area F.) is 4 x ESQ = Sloflfl. The total change in Welfare — change in CS + change in PS 4' govermnent revenue = rlfldfl + 440' -| one = — 324%. The desdweight loss is $4M} {areas DF}. ...
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Revised_Ch01_solutions - -I,—_n—__ “DEPzigé-‘Z—...

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