Question.3123 - 3. What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Smart car? a. Small automobiles become more fashionable. b. The price of large automobiles rises (with the price of small autos remaining the same). c. Income declines and small autos are an inferior good. d. Consumers anticipate that the price of small autos will greatly come down in the near future. e. The price of gasoline substantially drops. 6. What effect will each of the following have on the supply of auto tires? a. A technological advance in the methods of producing tires. b. A decline in the number of firms in the tire industry. c. An increase in the prices of rubber used in the production of tires. d. The expectation that the equilibrium price of auto tires will be lower in the future than currently. e. A decline in the price of the large tires used for semi trucks and earth-hauling rigs (with no change in the price of auto tires). f. The levying of a per-unit tax on each auto tire sold. g. The granting of a 50-cent-per-unit subsidy for each auto tire produced. 8. In 2001 an outbreak of hoof-and-mouth disease in Europe led to the burning of millions of cattle carcasses. What impact do you think this had on the supply of cattle hides, hide prices, the supply of leather goods, and the price of leather goods? 11. Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown in the table below. Suppose that the government establishes a price ceiling of $3.70 for wheat. What might prompt the government to establish this price ceiling? Explain carefully the main effects. Demonstrate your answer graphically. Next, suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effects of this price floor? Demonstrate your answer graphically. Chapter 3 Problems 3. Refer to the expanded table below from question 11. What is the equilibrium price? At what price is there neither a shortage nor a surplus? Fill in the surplus-shortage column and use it to confirm your answers.b. Graph the demand for wheat and the supply of wheat. Be sure to label the axes of your graph correctly. Label equilibrium price P and equilibrium quantity Q. c. How big is the surplus or shortage at $3.40? At $4.90? How big a surplus or shortage results if the price is 60 cents higher than the equilibrium price? 30 cents lower than the equilibrium price? Thousands of bushels Price Per Thousands Surplus (+) Demanded Bushel of bushels supplied or Shortage (-) 85 $3.40 72 80 3.70 73 75 4.00 75 70 4.30 77 65 4.60 79 60 4.90 815. Use two market diagrams to explain how an increase in state subsidies to public colleges might affect tuition and enrollments in both public and private colleges. Chapter 5 Questions 1. Explain the two causes of market failures. Given their definitions, could a market be affected by both types of market failures simultaneously? 4. What are the two characteristics of public goods? Explain the significance of each for public provision as opposed to private provision. What is the free-rider problem as it relates to public goods? Is U.S. border patrol a public good or a private good? Why? How about satellite TV? Explain. 5. Draw a production possibilities curve with public goods on the vertical axis and private goods on the horizontal axis. Assuming the economy is initially operating on the curve, indicate how the production of public goods might be increased. How might the output of public goods be increased if the economy is initially operating at a point inside the curve? 6. Use the distinction between the characteristics of private and public goods to determine whether the following should be produced through the market system or provided by government: (a) French fries, (b) airport screening, (c) court systems, (d) mail delivery, and (e) medical care. State why you answered as you did in each case.
Answer Below:
What xxxxxx will xxxx of xxx following xxxx on xxx demand xxx small xxxxxxxxxxx such xx the xxxxx Cooper xxx Smart xxx a xxxxx automobiles xxxxxx more xxxxxxxxxxx Ans xxx demand xxx small xxxxxxxxxxx will xxxx if xxx small xxxxxxxxxxx become xxxx fashionable x The xxxxx of xxxxx automobiles xxxxx with xxx price xx small xxxxx remaining xxx same xxx When xxx price xx large xxxxxxxxxxx rises xxx demand xxxx fall xxxxxxx increasing xxx demand xxx small xxxxxxxxxxx c xxxxxx declines xxx small xxxxx are xx inferior xxxx Ans xx income xxxxxxxx the xxxxxx for xxx inferior xxxxx increases xxxxx the xxxxxx for xxxxx automobiles xxxx also xxxxxxxx with xxx decline xx the xxxxxx d xxxxxxxxx anticipate xxxx the xxxxx of xxxxx autos xxxx greatly xxxx down xx the xxxx future xxx When xxxxxxxxx anticipate xxxx the xxxxx of xxxxx autos xxxx greatly xxxx down xx the xxxx future xxxx the xxxxxx for xxxxx automobile xxxx decrease xx the xxxxxxxxx will xxxx their xxxxxxxx till xxx price xxxxxxx e xxx price xx gasoline xxxxxxxxxxxxx drops xxx The xxxxxx of xxxxx automobiles xxxx increase xxxxx the xxxxxxxxxxx decline xx the xxxxx of xxxxxxxx What xxxxxx will xxxx of xxx following xxxx on xxx supply xx auto xxxxx a x technological xxxxxxx in xxx methods xx producing xxxxx Ans x technological xxxxxxx in xxx method xx production xx auto xxxxx will xxxxx its xxxxxx b x decline xx the xxxxxx of xxxxx in xxx tire xxxxxxxx Ans x decline xx the xxxxxx of xxxxx in xxx tire xxxxxxxx will xxxxxx tire xxxxxxxxxx and xxxxx cause xxxxxxx in xxx supply xx auto xxxxx c xx increase xx the xxxxxx of xxxxxx used xx the xxxxxxxxxx of xxxxx Ans xx increase xx the xxxxxx of xxxxxx used xx the xxxxxxxxxx of xxxxx implies xx increase xx the xxxxxxxxxx cost xxxxx the xxxxxx of xxxx tires xxxx decrease xxxx such xxxxxxxx in xxx material xxxx d xxx expectation xxxx the xxxxxxxxxxx price xx auto xxxxx will xx lower xx the xxxxxx than xxxxxxxxx Ans xxxxxx and xxxxx of x commodity xxx positively xxxxxxxxxx hence xx the xxxxxx equilibrium xxxxx is xxxxxxxx to xx lower xxxx its xxxxxxx level xxxx the xxxxxx of xxxxx will xxxx decline x A xxxxxxx in xxx price xx the xxxxx tires xxxx for xxxx trucks xxx earth-hauling xxxx with xx change xx the xxxxx of xxxx tires xxx A xxxxxxx in xxx price xx large xxxxx used xxx semi xxxxxx earth-hailing xxxx will xxx have xxx effect xx the xxxxxx of xxxxx as xxxx the xxxxxxxx are xxxxxxx related xxx a xxxxxxxxxx of xxxx other x The xxxxxxx of x per-unit xxx on xxxx auto xxxx sold xxx The xxxxxxxxxx per-unit xxx on xxx sale xx auto xxxx will xxxxxx its xxxxxx g xxx granting xx a xxxxxxxxxxxxxx subsidy xxx each xxxx tire xxxxxxxx Ans x -cent-per-unit xxxxxxx for xxxx auto xxxx produced xxxxxxx the xxxx of xxxxxxxxxx hence xxxx will xxxxxxxx the xxxxxx of xxxxx In xx outbreak xx hoof-and-mouth xxxxxxx in xxxxxx led xx the xxxxxxx of xxxxxxxx of xxxxxx carcasses xxxx impact xx you xxxxx this xxx on xxx supply xx cattle xxxxx hide xxxxxx the xxxxxx of xxxxxxx goods xxx the xxxxx of xxxxxxx goods xxx In xx outbreak xx hoof-and-mouth xxxxxxx in xxxxxx led xx the xxxxxxx of xxxxxxxx of xxxxxx carcasses xxxx the xxxxxx of xxxxxx has xxxxxxxxx which xxxxxxx that xxx demand xxx cattle xxxxx will xxxxxxxx This xxxx consequently xxxxxx the xxxx prices xx get xxxxxxxxxxxx equilibrium xx the xxxxx is xxxxxxx than xxxxxx Also xxxxxxxx in xxx number xx cattle xxxx reduce xxx production xx leather xxxxx due xx scarcity xx the xxx material xxxx scarcity xx cattle xxxx increase xxx cost xx production xxx hence xxxxxx the xxxxxx of xxxxxxx goods xxx lower xxxxxx of xxxxxxx goods xxxx increase xxx price xx leather xxxxx Suppose xxx total xxxxxx for xxxxx and xxx total xxxxxx of xxxxx per xxxxx in xxx Kansas xxxx grain xxxxxx are xx shown xx the xxxxx below xxxxxxx that xxx government xxxxxxxxxxx a xxxxx ceiling xx for xxxxx What xxxxx prompt xxx government xx establish xxxx price xxxxxxx Ans xxx government xxxxx have xxxxxxxxxxx the xxxxx ceiling xx so xxxx people xxxxx afford xx purchase xxxx necessity xxxxxxx wheat xxxxxxx carefully xxx main xxxxxxx Ans xxx government xxx established xxx price xxxxxxx at xxxxx which xx lower xxxx the xxxxxx equilibrium xxxxx which xx in xxx problem xxxx a xxxxxxxxx will xxxxx a xxxxxx shortage xx the xxxxxxxxx of xxxxx won x be xxxxxxx to xxxxxx this xxxxxxx at xxxx lower xxxxx Consequently xxxxxxxx demanded xxxx not xxxx the xxxxxxxx supplied xxxx a xxxxxxxxx might xxxx create x black xxxxxx for xxxxx to xxxxx up xxxxx scarcity xxxxxxxxxxx your xxxxxx graphically xxxxxxxxxxxxxxxx suppose xxxx the xxxxxxxxxx establishes x price xxxxx of xxx wheat xxxx will xx the xxxx effects xx this xxxxx floor xxx At xxx price xx quantity xxxxxxxx is xxxxxxxx barrels xxxxx the xxxxxxxx supplied xx thousand xxxxxxx A xxxxx floor xxxxx the xxxxxxx prices xxx by xxx government xx certain xxxxxxxxxxx as x price xxxxxxx measure xx our xxxxxxx the xxxxx floor xxx by xxx government xx higher xxxx the xxxxxx equilibrium xxxxx of xxxxx this xxxxxxxxx will xxxxxx a xxxxxxx supply xx wheat xxxxx might xx turn xxxx the xxxxxxxxx as xxxx will xxxxxxx wheat xx the xxxxxx prices xxxxx there xxx t xx any xxxxxxxx of xxx entire xx their xxxxx at xxxx price xxxxxxx Problems xxxxx to xxx expanded xxxxx below xxxx question xxxx is xxx equilibrium xxxxx At xxxx price xx there xxxxxxx a xxxxxxxx nor x surplus xxx The xxxxxxxxxxx price xx the xxxxx at xxxxx the xxxxxxxx demanded xx a xxxxxxxxx equals xxx quantity xxxxxxxx of xxxx commodity xx a xxxx market x market xxxxxxx any xxxxxxxxxxx or xxxxxxxxxx interference xxx equilibrium xxxxx is xxxx to xxx price xx which xxx producers xxx willing xx sell xxx of xxxxx produce xx our xxxxxxx equilibrium xxxxx for xxxxx is xx at xxxx price xxx quantity xx wheat xxxxxxxx bushels xxxxxx the xxxxxxxx of xxxxx supplied xxxxxxx Thousands xx bushels xxxxx Per xxxxxxxxx Surplus xxxxxxxx Bushel xx bushels xxxxxxxx or xxxxxxxx - x - x Graph xxx demand xxx wheat xxx the xxxxxx of xxxxx Be xxxx to xxxxx the xxxx of xxxx graph xxxxxxxxx Label xxxxxxxxxxx price x and xxxxxxxxxxx quantity x DemandSupplyc xxx big xx the xxxxxxx or xxxxxxxx at xx How xxx a xxxxxxx or xxxxxxxx results xx the xxxxx is xxxxx higher xxxx the xxxxxxxxxxx price xxxxx lower xxxx the xxxxxxxxxxx price xxx At xxxxx is xxxxxxxx of xxxxxxx of xxxxx At xxxxx is xxxxxxx of xxxxxxx of xxxxx The xxxxxxx equilibrium xxxxx is xxx if xxx price xxxxxxx cents xxxxxx i x there xxxx be xxxxxxx of xxxxxxx of xxxxx and xx the xxxxx becomes xxxxx lower xxxx the xxxxxxxxxxx price x e xxxx there xxxx be xxxxxxxx of xxxxxxx Use xxx market xxxxxxxx to xxxxxxx how xx increase xx state xxxxxxxxx to xxxxxx colleges xxxxx affect xxxxxxx and xxxxxxxxxx in xxxx public xxx private xxxxxxxx Ans xxxxx subsidies xxx given xx public xxxxxxxx to xxxx the xxxxxxxx keep xxx tuition xxxx and xxxxxxx increase xxx number xx enrolments xxxxx and xxxxxxxx in xxx state xxxxxxxxx to xxxxxx colleges xxxx increase xxx enrolment xx public xxxxxxxx This xxxxxxxxx enrolment xx public xxxxxxxx will xx turn xxxxxxxxx affect xxxxxxxxx in xxxxxxx colleges xxxxxxxxx in xxxxxx CollegeEnrolment xx public xxxxxxx Enrolment xx Private xxxxxxxxxxxxxxxx in xxxxxxx CollegeChapter xxxxxxxxx Explain xxx two xxxxxx of xxxxxx failures xxxxx their xxxxxxxxxxx could x market xx affected xx both xxxxx of xxxxxx failures xxxxxxxxxxxxxx Market xxxxxxx refers xx a xxxxxxxxx where xxxxx does xxx exist xxxx and xxxxxxxxx allocation xx resources xx free xxxxxx The xxx main xxxxxx of xxxxxx failure xxx Monopolised xxxxxx It xx a xxxxxxxxx where xxxxx are xxx numbers xx producers xxx have xxxxxx control xxx which xxxx times xxxxxxx in xxxxx and xxxxxxxxx discrimination xxx thereby xxx allowing xxx optimal xxxxxxxxxxx of xxxxxxxxx In xxxx markets xx the xxxxxxxxx have xxxx power xxxxx there xx an xxxxxxxxxx market xxxxxxxx Negative xxxxxxxxxxxxx Externality xx a xxxxxxxx where xxx effect xx the xxxxxx of xxx party xx borne xx the xxxxx party xxx had xxxx uninvolved xx the xxxxxxxxxxx E x - xxxxx pollution xxxxxx by xxx chemical xxxxxxxxx pollutes xxx nearby xxxxx and xxxxx The xxxxxxxx markets xx this xxxxxxxxxxx are xxx producer xx the xxxxxxxx products xxx the xxxxxxxxx of xxx market xxxxxxxx But xxx habitants xx the xxxxxx lakes xxx ponds xxxx to xxxxxx from xxx pollutants xxxxxxxx in xxx lakes xxxxx they xxx never xxxx an xxxxxxxx party xxxxx the xxxxxxxxxxx of xxx causes xx market xxxxxxx it xxx be xxxx that xxx two xxxxxx can xxxxx simultaneously xxxx are xxx two xxxxxxxxxxxxxxx of xxxxxx goods xxxxxxx the xxxxxxxxxxxx of xxxx for xxxxxx provision xx opposed xx private xxxxxxxxx What xx the xxxxx rider xxxxxxx as xx relates xx public xxxxx Is x S xxxxxx patrol x public xxxx or x private xxxx Why xxx about xxxxxxxxx TV xxxxxxx The xxx main xxxxxxxxxxxxxxx of xxxxxx goods xxx a xx is xxxxxxxxxxxxxx The xxxxxxxxxxx of xxx public xxxx by xx individual xxxx not xxxxxx the xxxxxx for xxxx good x It xx non-excludable- xxx additional xxxx of xx additional xxxxxxxx of xxxx good xxxx be xxx that xx individuals xxxxxx be xxxxxxxx from xxx market x public xxxx is xxx which xxxxxx be xxxxxxxx from xxx by xxx and xxxx the xxxxxxxxxxx of xxxxx is xxx affected xx action xx an xxxxxxxxxx A xxxxxxx good xx one xxxxx consumption xx excludable xxx its xxxxxx might xxx impacted xx the xxxxxx of xxxxxxxxxxx In xxxxxxxx to xxx public xxxxx if xxx contribution xx the xxxxxxxxx of xxx good xx very xxxx it xxxxxxxxx the xxxx of xxx supplier xxxxx could xxxxxx the xxxxxxx of xxxxxxxx In xxxx a xxxxxxxxx the xxxxxxxx will xxxxx loss xxx will xxxx the xxxxxx market xxxxxxxxx in xxxxxx failure xxxx is xxxxx as xxxxxxxxxx problem x S xxxxxx patrol xx a xxxxxx good xx patrolling xx the xxxxxx is x non xxxxxxxxxx act xx part xx the xx Government xxx also xxx price xxxx for xxxx is xxx recognisable xxx any xxxxxxxxxx aence xxxx cannot xxxxxx the xxxxxxxxxx Satellite xx is xxxx a xxxxxxx good xx there xx a xxxxx quantity xx satellite xxx manufactured xxxx the xxx of xxx same xxx be xxxxxxxx as xxx the xxxxxxxxxxx and xxxxxx of xxx consumers xxxx a xxxxxxxxxx possibilities xxxxx with xxxxxx goods xx the xxxxxxxx axis xxx private xxxxx on xxx horizontal xxxx Assuming xxx economy xx initially xxxxxxxxx on xxx curve xxxxxxxx how xxx production xx public xxxxx might xx increased xxx might xxx output xx public xxxxx be xxxxxxxxx if xxx economy xx initially xxxxxxxxx at x point xxxxxx the xxxxx Ans xxx production xxxxxxxxxxx curve xx as xxxxx below xx the xxxxxxx is xxxxxxxxx on xxx curve xx implies xxxx the xxxxxxx has xxxxxxxx optimum xxxxx of xxxxxxxxx and xx produce xxxx of xxxxxx goods xx will xxxx to xxxxxxxxx that xxxx amount xx private xxxxx i x if xx is xxxxxxxxx at xxxxx C xx will xxxx to xxxx to xxxxx B xx the xxxxxxx is xxxxxxxxx at x point xxxxxx the xxxxx i x point x in xxx diagram xx implies xxxx there xxx unutilised xxxxxxxxx which xx properly xxxx will xxxxxxxx more xxxxxx goods xxxxxxx sacrificing xx the xxxxxxx goods xxx the xxxxxxxxxxx between xxx characteristics xx private xxx public xxxxx to xxxxxxxxx whether xxx following xxxxxx be xxxxxxxx through xxx market xxxxxx or xxxxxxxx by xxxxxxxxxx a xxxxxx fries x airport xxxxxxxxx c xxxxx systems x mail xxxxxxxx and x medical xxxx State xxx you xxxxxxxx as xxx did xx each xxxx a xxxxxx fries xx a xxxxxxx good xx its xxx can xx excluded xxx should xx produced xxxxxxx the xxxxxx system x Airport xxxxxxxxx is x public xxxx as xxx use xx non xxxxxxxxxx and xxxx the xxxxxx of xx individual xxxx not xxxxxx the xxxxxxxxx procedure xxxxx it xxxxxx be xxxxxxxx by xxx government x Court xxxxxxx are xxxxxx goods xx they xxxxx the xxxxxxx on x whole xxx benefits xxx the xxxxxxxxxxx even xx they xxx not xxxxxxxx directly xx any xxxxxxxxxxx They xxx non xxxxxxxxxx as xxxx help xxxxxxxx law xxxxx and xxxxxxx hence xxx government xxxxxx provide xxxxx systems x Mail xxxxxxxx in xxxx of xxxxxx services xx a xxxxxx good xx it xxxxxxxx all xxx individuals xxx is xxx excludable xxxx exclusion xx an xxxxxxxxxx will xxx impact xxx mail xxxxxxxx services x Medical xxxx is x private xxxx as xx is xxxxxxxxxx and xxxx importantly xxx use xx medical xx an xxxxxxxxxx can xxxxxxx another xxxxxxxxxx from xxx satisfaction xxxxxxx from xxx use xx medical xxxx receivedMore Articles From Economics
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