Question

Instructions: In parts b and c, round your responses to two decimal places. In part d, enter your response as a whole number. What is the equilibrium price? $2.50 per gallon If quantity supplied at every price is reduced by 12 gallons, what is the new equilibrium price? $2.00 per gallon If the government freezes the price of gasoline at its initial equilibrium price found in part a, how much of a surplus or shortage will exist when supply is reduced as described in part c? There will be a shortage of 12 gallons. 

          Instructions: In parts b and c, round your responses to two decimal places. In part d, enter your response as a whole number.

What is the equilibrium price?
$2.50 per gallon

If quantity supplied at every price is reduced by 12 gallons, what is the new equilibrium price?
$2.00 per gallon

If the government freezes the price of gasoline at its initial equilibrium price found in part a, how much of a surplus or shortage will exist when supply is reduced as described in part c?
There will be a shortage of 12 gallons.
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instructions in parts b and c round your responses to two decimal places in part d enter your response as a whole number what is the equilibrium price 250 per gallon if quantity supplied at 46327

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Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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Instructions: In parts b and c, round your responses to two decimal places. In part d, enter your response as a whole number. What is the equilibrium price? $2.50 per gallon If quantity supplied at every price is reduced by 12 gallons, what is the new equilibrium price? $2.00 per gallon If the government freezes the price of gasoline at its initial equilibrium price found in part a, how much of a surplus or shortage will exist when supply is reduced as described in part c? There will be a shortage of 12 gallons.
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Suppose that initially the gasoline market is in equilibrium, at a price of $\$ 2.50$ per gallon and a quantity of 45 million gallons per month. Then a war in the Middle East disrupts imports of oil into the United States, shifting the supply curve for gasoline from $S_{1}$ to $S_{2}$ . The price of gasoline begins to rise, and consumers protest. The federal government responds by setting a price ceiling of $\$ 2.50$ per gallon. Use the graph to answer the following questions. a. If there were no price ceiling, what would be the equilibrium price of gasoline, the quantity of gasoline demanded, and the quantity of gasoline supplied? Now assume that the price celling is imposed and that there is no black market in gasoline. What are the price of gasoline, the quantity of gasoline demanded, and the quantity of gasoline supplied? How large is the shortage of gasoline? b. Assume that the price ceiling is imposed, and there is no black market in gasoline. Show on the graph the areas representing consumer surplus, producer surplus, and deadweight loss. c. Now assume that there is a black market, and the price of gasoline rises to the maximum that consumers are willing to pay for the amount supplied by producers, at $\$ 2.50$ per gallon. Show on the graph the areas representing producer surplus, consumer surplus, and dead-weight loss. d. Are consumers made better off with the price ceiling than without it? Briefly explain.

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Transcript

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00:02 There are five questions given to us that is a, b, c, d and e.
00:07 So in question a, we have to calculate the total economic surplus at the free market equilibrium price and quantity.
00:16 So we can use the formula total economic surplus is equal to producer surplus plus consumer surplus.
00:42 So producer surplus is equal to 0 .5 multiplied by market price.
00:56 Subtracted from minimum supply price.
01:07 Multiplied by quantity.
01:12 Which is equal to 0 .5 multiplied by 10 subtracted from 3 multiplied by 10, which is equal to 35 then consumer surplus is equal to 0 .5 multiplied by market.
01:31 Sorry maximum willingness to pay subtracted from market price.
01:49 Multiplied by quantity.
01:54 Which is equal to putting the value 0 .5 multiplied by 15 subtracted from 10 multiplied by 10, which is equal to $25.
02:05 So total surplus is equal to $35 that is producer surplus added to $25 that is consumer surplus is equal to we get 60 per day.
02:25 Now in question b, we have to calculate the total economic surplus with the price selling at $7.
02:34 So we need to determine the new quantity exchange and the new consumer surplus.
02:38 So new quantity exchange is equal to quantity at price selling.
03:04 Which is equal to 10 subtracted from 10 subtracted from 7 is equal to 7 units.
03:14 So producer surplus same formula that is 0 .5 multiplied by market price subtracted from minimum supply price multiplied by quantity...
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