ECON1210_COMMON02 ECON1210_COMMON02 [2024]
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The following equations describe the demand and supply of the market for taxi services in Utopia.
Demand: P=100-5Qd
Supply: P=10+4Qs
where P is the taxi fare ($/km), Qd and Qs are quantity demanded and quantity supplied respectively.
What happens in the short run if the government decides to set a price floor at $60 (Ignore the effect on long-run quality change)?
(I) The quantity demanded for taxi services will increase.
(II) The supply for taxi services will fall.
(III) The taxi fare would remain the same.
(IV) The quantity supplied for taxi services will increase.
(I) Causes the producer surplus to decrease, relative to the initial equilibrium
(II) Causes the consumer surplus to decrease, relative to the initial equilibrium
(III) Causes the total surplus to decrease, relative to the initial equilibrium
(I) Decreases a tax on the good sold in that market
(II) Increases a binding price ceiling by a small amount in that market
(III) Increases a subsidy on the good sold in that market
(IV) Increases a binding price floor by a small amount in that market
An effective price floor will increase the total revenue of firms in a market
The government thinks the rent is too high and implements a rent ceiling of $1,000. What is the value of consumer surplus and producer surplus respectively after the price ceiling has been implemented? (Assume that the production is allocated to the lowest cost producers and the consumption is allocated to the highest value consumers.)
Demand: P=700-10Qd
Supply: P=100+5Qs
where P is the rent ($/month), Qd and Qs are quantity demanded and quantity supplied respectively.
If the rent ceiling is set at $400 a month, what is the quantity of housing rented and what is the maximum price that someone is willing to pay for the last unit house available?
(III) A subsidy on the consumption of coffee.(IV) A tax on the consumption of milk, a complement of coffee.
Suburb A has a high burglary rate and they are considering the installation of anti-theft alarms. Each resident is willing to pay $30 for each additional anti-theft alarm installed in the suburb. There are 178 residents in the suburb. The marginal cost of installing another anti-theft alarm is 10 is the number of anti-theft alarm. The socially efficient number of anti-theft alarms to be installed in this suburb is
(In integers, please.)
Suppose the supply curve of oranges is P = 2.5Q . The free-market equilibrium price is $10. The government wants to impose a price ceiling at $2. As a result of this price control, we expect producer surplus to decrease by $
(In decimal numbers, with two decimal places, please.)
Debra is thinking about going to Disneyland with her friend. Debra is willing to pay HK$X to go to Disneyland. A ticket to Disneyland costs HK$428 and she will have to cancel her part-time job that pays HK$449. Normally, she would be unwilling to do the part-time job for less than HK$268. (Debra views the unpleasantness of the part-time job as an offset against her salary.) Debra will decide to go to Disneyland if and only if X is larger than or equal to
(In decimal numbers, with two decimal places, please.)
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