ECO302 Chp 9 HW Solutions

ECO302 Chp 9 HW Solutions - Chapter 9 1. Suppose there is a...

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Chapter 9 1. Suppose there is a new government program to subsidize the production of orange juice worth 50 cents per quart of orange juice. Draw a graph and label the areas for consumer surplus, producer surplus and government expense. Also, create a matrix for CS, PS, and GE with columns labeled “subsidy”, “no subsidy”, and “change”. Is there a deadweight loss or gain? Indicate the appropriate area. No Subsidy Subsidy Change CS A+B A+B+E+F+G E+F+G PS E+H B+C+E+H B+C GE 0 -B-C-D-E-F-G -B-C-D-E-F-G W A+B+E+H A+B+E+H-D -D The subsidy results in a deadweight loss.
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Chapter 9 2. Draw and label graphs for the two types of price support programs discussed in the text. Show the matrices for CS, PS and GE with columns labeled “no price support”, “price support”, and “change”. Is there a reason to prefer one type of price support over the other? * Dr. S said there would be a question asking you to identify the price support system represented and state your opinion. See Figures 9.6 and 9.7 on pages 9.7 and 9.8 for graphs and tables
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This note was uploaded on 09/18/2011 for the course ECO 302 taught by Professor Bartz-mavez during the Spring '09 term at University of Miami.

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ECO302 Chp 9 HW Solutions - Chapter 9 1. Suppose there is a...

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