Demand and Supply Consider that the market for gasoline per month is currently in equilibrium. For each of the following events, state the resulting impact in the market for gasoline by stating whether there is an increase, decrease, ambiguous (uncertain) or no change in the demand, the supply, the equilibrium price, and the equilibrium quantity of gasoline per month. [a.] The price of crude oil rises. [b.] The price of a car rises. [c.] Robots cut car production costs and all speed limits on highways are abolished. Government policies Consider that the demand for potato chips is QD = 8000 - 1000P and the supply of potato chips is QS = 2000P - 4000. [a.] What is the price consumers pay and the quantity traded (the amount consumers' buy)? Suppose the government imposes a $1.50 excise tax. [b.] What is the price consumers pay and the quantity traded (the amount consumers' buy)? [c.] What is the tax burden on consumers'? What can you say about the consumers' price elasticity compared to producers'? Consider that instead of the excise tax, the government imposes a $3.50 price control. [d.] What type of price control is this? [e.] What is the price consumers pay and the quantity traded (the amount consumers' buy)? Environmental Issues Consider three firms, each wishing to dump their chemical waste from production into the local river. These firms belong to different product markets and so the cost of disposing these chemicals safely (rather than polluting the river) is given in the table below, in millions of dollars. Private cost to safely dispose Firm A Firm B Firm C 1st barrel 2 1 1 2nd barrel 5 3 2 3rd barrel 8 5 3 https://www.coursehero.com/file/45105575/midterm-practice-questionspdf/ This study resource was shared via CourseHero.com ECO 9730 Firms in the Global Economy | Spring 2018 | Henry 2 Suppose the EPA estimates that the safe level of pollution is 3 barrels of chemicals per year. [a.] If the government provides each firm with a pollution permit, what would be the total private cleanup cost? [b.] If instead, the government decides to sell only three pollution permits, at what price should they sell these permits to ensure that no more than 3 barrels of chemicals are dumped into the river? What would be the total private cost of disposing these chemicals? Consumer Behavior Every week, Peter shops at the convenience store outside his apartment building purchasing bananas and coffee. His marginal utilities from consuming these goods are given in the table below. Currently, he allocates $13 per week from his salary as money to be spent in the convenience store. Quantity (per week) 1 2 3 4 5 6 7 8 MUCOFFEE 16 14 12 10 8 6 4 2 MUBANANA 12 11 10 9 8 7 6 5 [a.]If the price of coffee is $2 and the price of bananas is $1, what quantities of coffee and bananas would Peter purchase if he is at his consumer equilibrium? [b.]If the price of bananas increases to $3, would Peter change his consumption bundle? If yes, what is his new consumption bundle? If no, state that it has not changed. [c.] Consider that after the increase in the price of bananas, Peter decides to increase his convenience store spending money to $35. What is his consumption bundle? [d.] Sketch the demand curve for bananas. https://www.coursehero.com/file/45105575/midterm-practice-questionspdf/