--%>
Assignment Help - homework help

Are quantities supplied-demanded equal in intervation

In perfectly competitive market, the market demand curve is given by Qd = 10 − Pd, and the market supply curve is given by Qs = 1.5Ps.

a) Prove that the market equilibrium price and quantity in the lack of government intervention are of Pd = Ps = 4 and Qd = Qs = 6.

b) Let’s take two possible govt. interventions: (i) The price ceiling of $1 per unit; (ii) The subsidy of $5 per unit remunerated to producers. Prove that the equilibrium market price paid by consumers beneath the subsidy equivalents $1, the similar as the price ceiling. Are the quantities supplied and demanded similar beneath all government intervention?

E

Expert

Verified

a)    10 – P = 1.5P => P = 4 and Q = 10 – 4 = 6.

b) Beneath $5 subsidy remunerated to the producer, market price P = Pd and the after-subsidy price obtained by producers is Ps = Pd+5. Therefore: 10 – P = 1.5(P + 5) => P = 1.

   Related Questions in Business Economics

  • Q : Why is speculation unlike arbitrage

    Speculation is unlike arbitrage since: (1) speculative buyers always break even. (2) speculation causes increased costs. (3) speculators bear no risk. (4) positive returns for speculators are not sure. (5) competitive speculation equa

    		•
  • Q : Costs for a firm Question:  (a)      

    Question:  (a)       Complete the following table of costs for a firm.  (Note: enter the figures in the MC  column between outputs of  0 and 1, 1 and 2, 2 and 3, etc.) 

    		•
  • Q : Limitation of building blocks for a

    Building blocks for a capitalist system would not consist of: (1) supplies and demands. (2) private property rights. (3) laissez-faire policies. (4) market-found prices and outputs. (5) distribution of income in accord along with the principle, &ldquo

    		•
  • Q : Determine opportunity cost of making an

    The opportunity cost of making an exact alternative is: (i) useful primarily as an indicator of relative prices. (ii) its nominal costs into terms of all other goods. (iii) the information which guides your decision. (iv) measured through the subjecti

    		•
  • Q : Limitation of intermediaries for

    Intermediaries do not classically: (w) reduce transaction costs. (x) absorb risk. (y) try to make profits. (z) cause prices to be more volatile. I need a good answer on the topic of Economic problems. Please give m

    		•
  • Q : Define the terms Plant Define the

    Define the following terms?

    		•
  • Q : Illustrate the term Economic Rationale

    Illustrate the term Economic Rationale?

    		•
  • Q : Explain Unemployment Explain

    Explain Unemployment, Growth, and the Future?

    		•
  • Q : Question 7 Question 7: You are given

    Question 7: You are given the following data about two firms: FIRM A Quantity 0 1 2 3 4 5 6 Total revenue ($) 0 10 20 30 40 50 60 Average revenue ($) ___ ___ ___ ___ ___ ___ ___ Marginal revenue ($) ___ ___ ___ ___ ___ ___ Total cost ($) 30 42 50 60 76 100 14

    		•
  • Q : What are the major provisions of GATT

    What are the major provisions of GATT

    		•