Problems 7 and 10 of Ch 6 10 A market is described by the following supply and demand curves: QS=2P QD = 300 p a b c d Solve for the equilibrium price and quantity. If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded and size of the shortage or surplus? If the government imposes a price floor of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded and size of the shortage or surplus? Instead of a price control, the government levies a tax on producers of $30. As a result, the price paid by consumers PC is $30 more than the price received by sellers P. (In other words, PC = PS + 30.) Does a shortage or surplus (or neither) develop? What are 7 The federal government decides that Australia should reduce air pollution by reducing its use of petrol. The government imposes a $0.50 tax for each litre of petrol sold. a b c d Should this tax be imposed on producers or consumers? Explain carefully using a supply-and-demand diagram. If the demand for petrol were more elastic, would this tax be more effective or less effective in reducing the quantity of petrol consumed? Explain using both words and a diagram. Are consumers of petrol helped or hurt by this tax? Why? Are workers in the oil industry helped or hurt by this tax? Why? the prices paid by buyers and received by sellers, quantity supplied, quantity demanded and size of the shortage or surplus? Problems 4 and 5 of Ch 7 4 It is a hot day. and aert is very thirsty. Here is the valuehe places ona bottle ofwater Value of first bottle Value of second bottle Value Of third bottle Value Of fourth bottle $5 $4 $3 $2 a From this information, derive Bert's demand schedule. Graph his demand curve for bottled water b If the price of a bottle of water is $4.50, how many bottles does aert buy? How much consumer surplus does Bert get from his purchases? Show Bert's consumer surplus in your graph. C If the pnce falls to SISO how does quantity demanded change? How does Bert's consumer surplus change? Show these changes In your graptm 5 Ernie owns a water pump. Because pumping large amounts of water is harder than pumping small amounts, the cost of producing a bottle of water rtses as he pumps more. Here IS the cost he Incurs to produce each bottle of water: Cost Of first bottle Cost of second bottle Cost Of third bottle Cost of fourth bottle $2 $5