User Account

All Pages

What are the consequences for farm output

Assignment Help Microeconomics
Reference no: EM13123666

1. (a) Over the years there has been great improvement in farm technology. As a result, the American farmer is now more productive than ever before. However, the economic consequence of increased productivity has been a lowering of the price of farm output. Explain and show the effects of better technology on a demand and supply diagram.

(b) Suppose because of farmer complaints the government has decided to guarantee a price for farm products. Would this be a price ceiling or floor? Show and explain.

(c) What are the consequences for farm output as a result of this guaranteed price? Show and explain

(d) What does the term "equilibrium" mean in the context of a market economy? 

(e) Explain two ways in which there can be a new equilibrium at the "guaranteed" price.

2. (a) The Surgeon General has mounted a very successful advertising campaign in favor of cigarette smoking directed at consumers. Show and explain the effects of this on a demand/supply diagram for cigarettes.

(b) Based on your graph above, can some people actually end up decreasing their consumption of cigarettes? Show and explain.

c) Suppose there is a shift in the demand curve but there is no change in the amount of cigarettes sold. Show and explain how that might happen.

(d) Under what scenario (demand/supply diagram) would the ad. Campaign be most successful?

(e) Suppose, instead of targeting demand, the government decided to influence supply. Explain how this might happen.

(f) " The degree to which a campaign in favor of smoking directed towards the supply of cigarettes is successful depends upon the elasticity of demand." True or False? Show and explain.

3. The market for apples is not in equilibrium at P= $0 because producers are not willing to supply anything free and there is excess demand worth 8 apples. Producers, on the other hand, say that they will be happy to meet the demand for 8 apples provided the price is $8 per apple. Nothing doing, say the customers. At that price, they will not buy any. 

a) What is the equation for demand? Show your work.

b) What is the equation for supply? Show your work

c) If the influential neighborhood moms manage to convince the government to place a price ceiling on the apple market at $2, what will be the amount of the apples consumed? Show your work

4.The market for Spam is at equilibrium at P = $1 and Q = 20 billion tons

a) Show this in a demand and supply diagram.

b) Redraw the diagram to show consumer and producer surplus.

c) What is consumer surplus?

d) What is producer surplus?

e) Now assume that the government, in an effort to discourage Spam production, adds a $0.50 tax on Spam production. Show the amount of deadweight loss created by this tax.

f) What is deadweight loss and why does it make our market not efficient?

4. Assume the supply and demand curves for cars given below..

P = 15,000 - 2,500 Q P = 11,000

Where P is in dollars and Q is in millions of cars per month.

a) Draw this market in a graph and show the equilibrium price and quantity.

b) Calculate the amount of consumer surplus in this market and explain what that number means.

c) Calculate the total amount of the producer surplus in this market.

d) Now suppose that the government decides to impose a tax of $1000 per car on the supplier/producer. What is the amount of tax revenue that the government collects? Show, calculate, and explain.

e) What has happened to total economic surplus as a result of the tax? Show and explain.

Reference no: EM13123666

Questions Cloud

Solve demand for steak dinners : Maximizing Profit: Demand for Steak Dinners, The unit cost of producing a steak dinner at the Smalltown Inn is $6. If a restaurant charges p dollars for a steak dinner, customers will demand 200 - 5p steak dinners per week
Find chance that it will rain in nc that day : If it rains in Greenville on Monday, there is a 80% chance that it will rain in NC that day. What is the probability it will rain in at least one of the above states.
Illustrate what interest rate would firm want to refinance : Illustrate at what interest rates would the firm want to refinance? If the dividend yield drops to 8 percent, how long will it take before the present value of the interest savings exceeds the cost of refinancing?
Unfavorable materials quantity variance : There was a favorable materials price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that:
What are the consequences for farm output : What are the consequences for farm output as a result of this guaranteed price and what does the term "equilibrium" mean in the context of a market economy?
Fixed point-mean value theorem : A number (a) is called a fixed point of a function (f) if f(a)=a. Prove that, if f'(x) does NOT equal 1 for all real numbers (x), then f has at most one fixed point.
Linear transformation of the space of polynomials : Math: Linear Transformation of the Space of Polynomials, Which of the following is a linear transformation T of the space of polynomials? Circle the letters corresponding to correct answers.
Find out which case is fifo and which is lifo : Find out which case is FIFO and which is LIFO. State which case would result in the higher inventory value on the balance sheet and indicate why.
Compute the unit product cost for one gamelan : Selected data for the company's operations last year follow (all currency values are in thousands of rupiahs):Assume that the company uses absorption costing. Compute the unit product cost for 1 gamelan.

Reviews

Write a Review

Microeconomics Questions & Answers

  Difference between elastic and inelastic demand

What is the difference between elastic and inelastic demand. Please be precise. If a restaurant increases its price of coffee from $ 1.00 to $ 1.20 and quantity demanded falls from 100 cups to 80 cups. How can I compute the price elasticity of dema..

  Develop production function

An economist for the widget company estimated following short term production function. Compute the AP and MP mathematically and identify the three stages.

  Consumers utility maximization problem

Set up the consumer's utility maximization problem for prices pi, p2 and income m and how can this person be better off than by consuming the bundle

  Calculating equilibrium price and quantity

Assume a company has the following demand equation, Q = 1,000 - 3,000P + 10A, where Q = quantity demanded, P = product value, and A = advertising expenditures

  Computing marginal costs with excel

Using the given table, find out the quantity where MC = ATC. Find out the quantity where ATC is at its minimum. Find out the quantity that is the most efficient operating point for the firm.

  Determine the pretrade values of price and quantity

A new item that is manufactured and consumed only in United States and France is about to be launched. In the United States, the following demand and supply curves are appropriate,

  Advertising between competition and oligopoly

Consider some of products which are widely advertised on television. By what type of firm is each produced the perfectly competitive firm, an oligopolistic firm, or another kind of firm? How many major products can you think of that are not advert..

  Change balance of fixed and variable costs

Select an organization that has a high fixed cost and low variable cost balance to run its operations. Explain and discuss the balance of fixed and variable costs for the organization.

  Depict an isoquant map

Depict an isoquant map depicting a typical firm's use of two inputs - white and black labor. Label its slope. What would be the effect of an increase the price of black labor from $12 to $13 and a decrease in the price of white labor from $13 to $12..

  Construct a scatter graph

Construct a scatter graph showing the advertising and sales relationship over the last twelve months and using multiple regression, conduct an analysis of the firm's sales revenue, consumer incomes, and advertising.

  Question on labor economics

Suppose a firm is operating in perfectly competitive product market where the price of its output can be sold at the price p=$10. The firm can hire any number of workers at the wage of W=$50.

  Functions of short run average variable and marginal cost

Determine the short run average variable cost and the marginal cost functions. Determine the output level that minimizes short run average variable costs

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd