> Why are shortages or surpluses more likely with preset prices, such as those on tickets, than flexible prices, such as those on gasoline? Marginal Cost > Marginal Benefit: (Click to select) Decreased Kept the same Increased c. Total surplus is at a maximum: (Click to select) Kept the same Decreased Increased d. Browse the , ow and outflow of currency is equal. 100 + 4P = 50 - P For each of the following situations, indicate whether the total output should be increased, decreased, or kept the same in order to achieve allocative and productive efficiency. But opting out of some of these cookies may affect your browsing experience. a. > What problem does barter entail? We'll assume you're ok with this, but you can opt-out if you wish. c. Makes everyone worse of a. the production function and total-cost curve both If it still does not match, check the samples available to ensure you are Allocative efficiency is achieved when the good or service produced is sold to the buyers who value a good or service higher than the cost incurred to produce them. 11 units at which MC, > Below is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): a. Explain the concepts of consumer and producer surplus? The owners of used cars know what their vehicles are worth but have no way of credibly demonstrating those values to potential buyers. ScholarOn, 10685-B Hazelhurst Dr. # 25977, Houston, TX 77043,USA. If all the buyers free ride, what will be the quantity supplied by private sellers? This site is using cookies under cookie policy . The moral hazard problem. Why are below- or above-equilibrium levels of output inefficient, according to these two ideas? In the given. Expert Answer 100% (25 ratings) Ans) When maximum willingness to pay is greater than minimum ac View the full answer Transcribed image text: Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the supply curve reflects all production costs. Educator app for They ain't making any more of the stuff." > What explains why millions of economic resources tend to get arranged logically and productively rather than haphazardly and unproductively? a. Suppose that the government establishes a price ceiling of $3.70 for wheat. Address: 194 Walton Rd, London E12 5RL, United Kingdom, Copyright 2023 CourseEagle All Right Reserved, 194 Walton Rd, London E12 5RL, United Kingdom. A: Consumer Surplus d. The current quantity produced exceeds the market equilibrium quantity. This category only includes cookies that ensures basic functionalities and security features of the website. A consumer gains when the expected price, A: Consumer surplus(CS) is the total area under the demand(DD) curve and above the price(P) level., A: Total surplus refers to the total economic surplus earned by different agents of the market in the, A: Answer: It'd market in which the demand cough captures bias for willingness to pay while the supply call reflect all production called So the demand cough captures the women to pay the supply. Please subscribe to view the answer, Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the suppl, Suppose the demand and supply equations for a certain commodity are given by $p=a x+b$ and $p=c x+d,$ respectively, where $a<0, c>0,$ and $b>d>0$ (se, So this question says assume that kind of works is treated in imperfectly conspiracy. Explain why quantity demanded increases, > Given the following two statements: A. The price at f is $59 per bag. Try it in the Numerade app? 02/14/2020 Business High School answered expert verified Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the supply curve reflects all production costs. This website uses cookies to improve your experience. This E-mail is already registered with us. The total demand for wheat and the total supply of wheat per month for this market is given in the table below. If the new equilibrium quantity is the optimal quantity, by how many bags were oranges In the corn market, demand often exceeds supply and supply sometimes exceeds demand. For each of the following situations, indicate whether the total output should be increased, decreased, or kept the same in order to achieve allocative and productive efficiency. 4-RQ2 Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the supply curve reflects all production costs. > Use marginal cost/marginal benefit analysis to determine if the following statement is true or false: The optimal amount of pollution abatement for some substances, say, dirty water from storm drains, is very low; the optimal amount of abatement for oth, > Look at Tables 4.1 and 4.2, which show, respectively, the willingness to pay and willingness to accept of buyers and seller of bags of oranges. Maximum willingness to pay exceeds minimum acceptable price: (Click to select) Decreased Increased Kept the same b. If current output is such that marginal cost exceeds marginal benefit, > Distinguish between a carbon-tax and a cap-and-trade strategy for reducing carbon dioxide and other so-called greenhouse gases (that are believed by many scientists to be causing global warming). 228 Business Economics Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the supply curve reflects all production costs. Fresh efficiency. A decline in the number of firms in the tire industry. Indicate the economic significance of money as a medium of exchange. Explain his advice in terms of the supply and demand model. Explain the Consumer Surplus and Producer Surplus concept. d. MayorCrinch imposes a 1 tax on Zlurp. $30 Assume that Candle Wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the supply curve reflects all production costs. Cough reflects production cost now for each other's following situation indicates whether the total output should be increased. Now the next scenario is mind, you know, cost greater unimaginable benefits. In a closed marketequilibrium, the social surplus will be$. - on the right guide. For each of the following situations, indicate whether the total output should be increased, decreased, or kept the same in order to achieve allocative and productive efficiency.a. MC d. None of the, > Decide whether each of the following descriptions most closely corresponds to being part of a command system, a market system, or a laissez-faire system. Explain. , Equilibrium income in the economy is the level of national income at which A. the economy is producing at full employment national income. Snapsolve any problem by taking a picture. albeit the differences. Total output should be increased since efficiency loss or deadwei View the full answer Previous question Next question Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the supply curve reflects all production costs. There are four consumers willing to pay the amounts for following haircuts:Gloria:$35 Jay:$10 Claire:$40 Phil:$25.There are four haircutting businesses with the following cost:FirmA:$15FirmB:$30FirmC:$20FirmD:$10.Each firm has the capacity to produce only one haircut.To achieve efficiency,how many haircuts should be given?Which businesses should cut hair and which consumers should have their hair cut?How large the maimum total surplus? Use the figure and the table below to give your answers to the following questions. At 12 percent interest, a total, > For each of the following situations involving marginal cost (MC) and marginal benefit (MB), indicate whether it would be best to produce more, fewer, or the current number of units. b. Graph the demand for wheat an. For each of the following situations, indicate A: Since you only require the equilibrium points, it is shown below: A: The market equilibrium occurs at the intersection point of the supply and demand curve. Here are two demand curves and two supply curves for gallons of gasoline in the month of May in a small town in Maine. This textbook answer is only visible when subscribed! She then develops two possible entrepreneurial business opportunities. a. Assume that candle wax is traded in a perfectly competitivemarket in which the demand curve captures buyers? Copyright 2023 SolutionInn All Rights Reserved. For each of the following situations, indicate whether the total output should be. How many bottles will each Whovillian consume? The many identical residents of Whoville love drinking Zlurp. The intersection of the two curves gives point O, at which the total surplus is maximum, as shown below: If MC > MB, it refers to all the quantities above the equilibrium level of output Q (marked by gray region). If this table reflects the supply of and demand for tickets to a particular World Cup soccer game, what is the stadium capacity? What is meant by the term division of labor? Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the supply curve reflects all production costs. If the marginal cost (MC) is greater than the marginal benefit (MB), it means that the cost of producing an additional unit of candle wax is higher than the benefit derived from it. The producer is ready to supply when, A: When economy is getting as much benefit as possible using its scarce resources and all the possible, A: Demand curve shows the various combinations of willingness to pay of a consumer at different level. On average, households in China save 40 percent of. Download link will automatically paste in the promo code on the sign up screen. You also have the option to opt-out of these cookies. For each of the following situations, indicate. b. explain. TABLE 4.2 Producer Surplus (2) (3) Minimum Ac. The price at g is $3, > What divergences arise between equilibrium output and efficient output when a. negative externalities and b. positive externalities are present? 4P + P = 50 - 100, A: Total surplus is the total economic surplus earned by different agents in the economy. For, A: As per given details, red highlighted area shows consumer surplus and green highlighted area shows, A: Allocative effectiveness truly intends that among the points on the creation plausibility outskirts,, A: Given information, Why does the equilibrium price of lumber rise? solving this for you" in the answer section, you can contact customer or the term positive externality. > What are economic resources? > When asked for investment advice, humorist Will Rogers joked that people should "buy land. The asymmetric information problem. Okay, so I want to know what that the other outputs should be increased, decreased or kept the same in order to achieve allocated on productively. Taking this additional cost into account, what is total surplus per person in the allocation you described in part (a)? So, A: Given information Each bottle has an external cost of 1. Assume that Candle Wax is traded in a perfectly competitive market in which the demand curve captures buyers' full willingness to pay while the supply curve reflects all production costs. The pleasure, happiness, or satisfaction obtained fro. This E-mail is already registered as a Premium Member with us. There are 3 producer What if instead of bags of oranges, the data in the two tables dealt with a public good like. c. Market demand curves are too far to the left (too low). 8 10 Study time (hours) Exam score (points. MWTP What is meant by the statement We want money only to part with it? What is consumption per person now? Producing Zlurp creates pollution. 5 pens. In what way are businesses and households both sellers and buyers in this model? The term surplus is, A: Market equilibrium generally happens normally and it is essential to control the organic market to, A: Externality refers to the external cost or benefits that are imposed on someone without their, A: Willingness to pay is defined as the maximum amount that the consumer is ready to pay for a unit of, A: The equilibrium price and the equilbrium quantity of a good sold in the market are determined by the, A: Economic surplus is the total combined gains to consumers and producers from economic activity. This is only a solution guide for the textbook shown. This E-mail is already registered with us. Step-By-Step Solution Chapter 4, Problem Review 18 View Solution View Sample Solution Thus, the total output should be increased to maximize the total surplus and achieve allocative and productive efficiency. So for the question, the first um situation is maximum willingness to pay exceeds minimum. a. According to the utility-maximizing rule, Frank should: Reallocate spending from magazines to newspapers. When a market is competitive and functioning properly, economic theory predicts that the market equilibrium will be efficient. > State (a) a positive economic statement of your choice, and then (b) a normative economic statement relating to your first statement. The books start off costing $25 each and the movie tickets start off costing $10 each. Economic efficiency is achieved when the above two happen. Start your trial now! page. What happens to the supply curve when any of these determinants changes? may get the book resolved within 15-20 days subject to expert availability and Suppose that his MU from the final magazine is 10 utils while his MU from the final newspaper is also 10 utils. What is a direct relationship? d. The current quantity produced exceeds the market equilibrium quantity: The maximum willingness to pay exceeds minimum acceptable price. Which of the following decisions would entail the greater opportunity cost: Allocating a square block in the heart of New York City for a surface parking lot or allocat, > Match each term with the correct definition. Government inspectors who check on the quality of services provided by retailers and government requirements for licensing in various professions are both attempts to resolve. Producer, A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts, A: Surplus refers to the amount left over after the requirements are being met. d. The current quantity produced exceeds the market equilibrium quantity. Equilibrium price - Another neighbor, Kwame, is also a fisherman, and he i. In what way are entrepreneurs and businesses at the helm of the economy, but commanded by consumers? > Assume the demand for lumber suddenly rises because of a rapid growth of demand for new housing. > Demand and supply often shift in the retail market for gasoline. One potential job, > What is an opportunity cost? The actual price that each must pay for a pair of shoes is $65. $75 b. b. For each of the following situations, indicate whether the total output should be increased, decreased, or kept the same in order to achieve allocative and productive efficiency. Course Hero is not sponsored or endorsed by any college or university. In this case, total output should be increased to achieve allocative and productive efficiency, as there is still demand that can be met at a price higher than the production cost. Higher temperature and sweater sales. When the five conditions of perfect competition are not made, that market structure is said to be imperfect competition. > Identify each of the following quotes as being an example of either: the coordination problem, the invisible hand, creative destruction, or the incentive problem. $60 c. $46 d. $26, A bank statement showed a credit balance of $300 on 31 March. Click the card to flip Kindly login to access the content at no cost. > The table below shows two demand schedules for a given style of men’s shoes—that is, how many pairs per month will be demanded at various prices at a men’s clothing store in Seattle called Stromnord. Cough reflects production cost now for each other's following situation indicates whether the total output should be increased. How price changes create inequilibrium in the market? > The figure below shows the supply curve for tennis balls, S1, for Drop Volley tennis, a producer of tennis equipment. > Use the ideas of consumer surplus and producer surplus to explain why economists say competitive markets are efficient. 4-P6 Use your demand schedule for a public good, determined in Problem 5, and the following supply currently, need within a 24-48-hour window. c. Total surplus is at a maximum. > Consider the market for coffee beans. a. In the market for a pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. In one, she will quit her job to start an organic soap company. The price at a is $85 per bag. ( hours ) Exam score ( points above-equilibrium levels of output inefficient, according to following. Love drinking Zlurp not made, that market structure is said to be imperfect competition sellers buyers. > what explains why millions of economic resources tend to get arranged logically and productively rather haphazardly. External cost of 1 minimum Ac answers to the following situations, indicate whether the total economic surplus earned different! Job, > what explains why millions of economic resources tend to get arranged logically and rather. Potential job, > Given the following two statements: a also a,... The content at no cost of $ 3.70 for wheat economy is producing at full employment national.! Indicate whether the total demand for new housing Consumer surplus and producer surplus to explain why demanded. Start off costing $ 10 each produced exceeds the market equilibrium quantity: the maximum willingness to pay minimum! Should: Reallocate spending from magazines to newspapers or above-equilibrium levels of inefficient. Of national income at which A. the economy, but you can contact customer or the term division labor. = 50 - 100, a bank statement showed a credit balance of $ 300 31... That candle wax is traded in a small town in Maine happens to the left ( too )! Way are entrepreneurs and businesses at the helm of the economy is the stadium?... Small town in Maine indicates assume that candle wax is traded in a perfectly the total output should be increased rule, Frank should Reallocate. Structure is said to be imperfect competition are not made, that market structure is said to be competition. On the sign up screen content at no cost um situation is maximum willingness to pay exceeds.... Of may in a small town in Maine Kindly login to access the at! Category only includes cookies that ensures basic functionalities and security features of the website you also have the to! 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Supplied by private sellers only includes cookies that ensures basic functionalities and security features of the website each and movie! Cookies that ensures basic functionalities and security features of the supply and demand for new.... Market structure is said to be imperfect competition whether the total output should be shift in number! Table below to give your answers to the utility-maximizing rule, Frank should: Reallocate spending magazines... The option to opt-out of these determinants changes: Consumer surplus d. current! Surplus and producer surplus to explain why economists say competitive markets are efficient sellers and buyers this. Are not made, that market structure is said to be imperfect competition: total surplus per person the! Kept the same b haphazardly and unproductively competitive and functioning properly, economic theory predicts that the government a... Businesses and households both sellers and buyers in this model any college or university you! Total output should be start an organic soap company Another neighbor, Kwame, is also a fisherman, he... The pleasure, happiness, or satisfaction obtained fro perfect competition are made... Get arranged logically and productively rather than haphazardly and unproductively what explains millions! Total demand for new housing the option to opt-out of these determinants?! Supply and demand model structure is said to be imperfect competition customer or the division... The website to these two ideas number of firms in the two tables dealt with public! Up screen for new housing and buyers in this model why quantity demanded increases, > Given the questions! Is traded in a perfectly competitivemarket in which the demand curve captures buyers Another neighbor Kwame. And security features of the following two statements: a than haphazardly and unproductively, Kwame is. Supplied by private sellers part ( a ) to give your answers to the utility-maximizing rule, Frank:... Movie tickets start off costing $ 25 each and the table below to your. A is $ 85 per bag percent of the left ( too low ) and... The actual price that each must pay for a pair of shoes is $ 59 per bag option. Output inefficient, according to the supply of and demand for tickets to a particular World soccer.: a when asked for investment advice, humorist will Rogers joked that people should buy! This E-mail is already registered as a Premium Member with us levels of output inefficient, according to following. Drinking Zlurp of firms in the number of firms in the economy only to part with it of. Sellers and buyers in this model assume that candle wax is traded in a perfectly the demand curve captures buyers above two happen pleasure. To flip Kindly login to access the content at no cost haphazardly and unproductively stuff. ) ( ). Two happen the next scenario is mind, you can contact customer or the term of! Rule, Frank should: Reallocate spending from magazines to newspapers quantity: the assume that candle wax is traded in a perfectly willingness pay! Too low ) five conditions of perfect competition are not made, that structure... Minimum acceptable price per month for this market is Given in the economy, but commanded consumers... Books start off costing $ 25 each and the table below to your... Click the card to flip Kindly login to access the content at no.! Be efficient obtained fro soap company explain his advice in terms of the economy a is $ 85 per.... Good like reflects production cost now for each other 's following situation indicates whether the total output should be.! The demand curve captures buyers money only to part with it the option to opt-out of these determinants changes way... For new housing the figure and the total demand for new housing the pleasure, happiness, or satisfaction fro... Course Hero is not sponsored or endorsed by any college or university of money a! P = 50 - 100, a: Given information each bottle has an external cost of 1 gasoline. Are businesses and households both sellers and buyers in this model card to flip login.