--%>
Assignment Help - homework help

Programs exchanged in the market

For the question below, utilize the given information. The market for gizmos is competitive, with an increasing sloping supply curve and a downward sloping demand curve. With no govt. intervention, the equilibrium price is $25 and the equilibrium quantity is 10,000 gizmos. Consider the given programs of government intervention:

Program I: The govt. obliges an excise tax of $2 per gizmo
Program II: The govt. gives a subsidy of $2 per gizmo for gizmo producers.
Program III: The govt. obliges a price floor of $30.
Program IV: The govt. obliges a price ceiling of $20.
Program V: The govt. permits no more than 8,000 gizmos to be generated.

Which of such programs would lead to a less than 10,000 units exchanged in the market? Explain briefly.

E

Expert

Verified

Program I: The excise tax will raise the price consumers pay to a level above $25, and lower the price producers obtain to a level beneath $25; therefore, the quantity exchanged in the market will fall beneath 10,000 units.

Program II: With the subsidy, the price producers obtain will rise to a level above $25; the price consumers obtain will fall beneath $25. Therefore, the equilibrium quantity exchanged will increase to a point above 10,000.

Program III: With price floor of $30, consumers will purchase less than 10,000 gizmos; therefore fewer than 10,000 will be substituted in the market.

Program IV: With price ceiling of $20, producers will provide less than 10,000 gizmos; therefore fewer than 10,000 will be substituted in the market.

Program V: By govt. fiat, less than 10,000 gizmos will be substituted.

   Related Questions in Business Economics

  • Q : Describe what do you mean by European

    Describe what do you mean by European Union (EU)?

    		•
  • Q : Determine the Relative Price of given

    When turkey is $1 per pound and the relative price of ham to turkey is 2, in that case a pound of ham costs: (i) 50 cents. (ii) 1/2 pound of turkey. (iii) 2 pounds of turkey. (v) 12 pesetas. (iv) 5 euros. How can I

    		•
  • Q : The federal fiscal stimulus Question:

    Question: Was the stimulus package passed in 2009 as success?  In answering this question the focus should be the articles on the syllabus, but you should also include opinions of other commentators.   Your answer should also describe w

    		•
  • Q : Cost of debt and Equity Cost of debt =

    Cost of debt= (1-tax rate)* interest rate * (debt ÷capital employed)Cost of equity = risk free rate + market premium (equity shareholders funds÷ capital employed)

    		•
  • Q : Elucidate the gains that have occurred

    Elucidate the gains that have occurred using the resources as before specialization?

    		•
  • Q : Characteristics of Perfectly

    Perfect competition is characterized by all of the following except w) heavy advertising by individual sellers. x) homogeneous products. y) sellers are price takers. z) a horizontal demand curve for individual sellers.

    Q : Society decide its optimal point on the

    How does society decide its optimal point on the production possibilities curve?

    		•
  • Q : Problem on prisoners dilemma game Lets

    Lets assume an infinitely repeated prisoner’s dilemma game by two players. The resulting payoffs at each phase by the actions of two players are illustrated below in the table (payoffs are symbolized like (payoff for player 1, payoff for player 2)). Two players

    		•
  • Q : Maximizes profits in a perfectly

    Which of the given is not true for a firm within perfect competition: w) Profit equivalents total revenue minus total cost. x) Price equivalents average revenue. y) Average revenue is greater than marginal revenue. z) Marginal revenue equivalents the

    		•
  • Q : Qualitative and Quantitative data What

    What is the difference between qualitative data and quantitative data, provide an example of each.

    		•