lQuestion 05 Consider the same information in question I34, but now assume the government intervenes in the competitive equiiibrium increasing the quantitvI bv 5 units and, consequentlv, reducing the price. As before, consider the welfare changes. which of the following alternatives is correct? {a} The consumer surplus decreases from 5225 to 43201] [b] The producer surplus increases from $45Erto $300 lcj The total surplus becomes negative {turns into a general welfare loss} [d] The intervention generates a welfare loss; the deadweight loss is 535 Question DIE As in question US, consider two different linear demand curves, A and B, passing through the same equilibrium point 91 =[G1.p1j={3l].r1-U]:p"[}= ICIICI 2E} and p913?) = TU Q. As in Solved Problem 9.4, consider a horizontal supply.I curve passing through point e1. Assume th e government im poses a tax of $11] dollars on sellers and considerthe welfare changes that fol low. which of the following alternatives is correct? {a} For demand A, the tax decreases consumer surplus bv $250 [is] For demand E, the tax decreases consumer surplus by $35 [cl For demand A, the tax generates a deadweight loss of $25 {d3 For demand E, the tax generates a deadweight loss of$25 Question D? Considerthe same information in question 06. But now assume that the supplv curve is given by p = 1U + Q and that the government is imposing a higher taa: on sellers equaI to $13 per unit. "M'rich of the following alternatives is correct? ia} The reduction in consumer surplus is larger for demand A than for demand El [b] The reduction in consumer surplus is larger for demand B than for demand A {ch The reduction in consumer surpius is file same for demands A and B {d} The revenue generated hv this tax is the same for demands A and B Queslim DB Consider 11'\"? following demand a nd supply curves for a nnual gym memberships in a certain city. Demand: Q\" = EDD 2p. Supply: Q5 = (3.5;! 5!} Assume mm the city goyemment offers a per-unit subsidy of $25 to those who sign up for an annual gym membership. Recalling what you learned in chapters [l2 a DB, nd the equilibrium pre and post subsidy. Which of the fol lowing alternatives is correct? la] The share of the subsidy benet that goes to the buyers is BEE-\"u lb] The share of the subsidy benet that goes to the sellers is 30% {cl The share of the subsidy benet that goes to the buyers is 30% {d] The share of the subsidy benet that goes to the sellers is i'D'ii Question [l9 Consider the same information in question 03. Do a welfare analysis comparing consumer surplus, producer surplus, and total surplus pre and post subsidy. Whid1 of the following alternab'yes is correct? la} The change in consumer surplus is an increase of SLED-D lb] The change in producer surplus is an increase of 5325 [c] The change in total surplus is a reduction of 5125 {d] The goyemment expenditure with this subsidy is 51,5434] Queslim ll] Consider d1e followinglinyersel demand and supply curves for construction workers in Email City. Demo rid: p\" = T5 2o. Supply: p5 = [LED The price and quantity of equilibrium are p' = 15 and l?" = 311 The city decides to establish a minimum wage tin effect, a price oor] equal to par = ll]. Do a wellare analysis comparing the equilibrium before and after the price floor. Which of the following alternatiy is correct? [Assume quantities are given in thousands of hours of consb'uction work: la} The plice floor decreases producer surplus by approx. SSthousand dollars [b] The plice floor increases consumer surplus by approx. 35 d1ousand dollars {cl The plice floor increases to1al welfare by a pprox. 11 mousa nd dollars [d] The mice floor generates a shortage lexcess supply] of ?.5 thousand hours