Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please explain question 10, and fill out that blank for Q10. Also please choose for Question 22, and draw the drawings and explain please. Thank
Please explain question 10, and fill out that blank for Q10.
Also please choose for Question 22, and draw the drawings and explain please. Thank you!
Question 10 (2 points) A government wants to impose a ceiling on the price of hand sanitizer, to help low- income workers protect themselves against COVID. Without any intervention, the market clearing price for sanitizer is 1 dollar per bottle, and the quantity supplied and demanded at that price are 10 million bottle per month. The consumer with the highest willingness to pay would buy a bottle for 2 dollars. If the government prohibits selling each bottle at a price above 0.5 dollars, the quantity demanded increases to 15 million bottles, but producers are only willing to sell 5 million bottles. Producers are upset; without intervention, if they had chosen to produce only 5 million bottles, they could have sold them for 1.5 dollars each. Assume the supply and demand curves are both continuous and linear. Explain in two sentences who are the winners and who are the losers (2 points).A government is considering imposing a ceiling on the price of hand sanitizer, to help low-income workers protect themselves against COVID. Without any intervention, the market clearing price for sanitizer is 1 dollar per bottle, and the quantity supplied and demanded at that price are 10 million bottle per month. The consumer with the highest willingness to buy would buy a bottle for 2 dollars. If the government prohibits selling each bottle at a price above 0.5 dollars, the quantity demanded increases to 15 million bottles, but producers are only willing to sell 5 million bottles. Producers are upset; without intervention, if they had chosen to produce only 5 million bottles, they could have sold them for 1.5 dollars each. Assume the supply and demand curves are both continuous and linear. INPUT ONLY INTEGERS AS ANSWERS, NO COMMAS OR UNITS. FOR EXAMPLE WRITE "1000", DO NOT WRITE "1,000" or "$1000" What is the consumer surplus without any intervention? (2 points) A/ What is the consumer surplus with the intervention? (2 points) What is the producer surplus without any intervention? (2 points) What is the producer surplus with the intervention? (2 points) How much is the deadweight loss? (2 points) A/Question 21 (2 points) The market for milk is in a long-run equilibrium. Then, a new study finds that drinking milk causes heart disease: How will the market for milk-which is perfectly competitive- adjust when this information is released? (Select all the correct statements) (2 points, 0.5 per correct selection) In the short run, some firms will exit the market and both the supply, and the price will decrease In the short run, firms will exit the market. The supply will fall sharply, thereby increasing the price. In the short run, existing firms will incur a loss None of the aboveQuestion 22 (4 points) The market for milk is in a long-run equilibrium. Then, a new study finds that drinking milk causes heart disease. Show graphically how the market will adjust to the release of the study. For this, draw three graphs (to be uploaded as one image) reflecting the following three phenomena in the short run: 1. How the study will affect the demand for milk (1 point); 2. How existing firms will react to the shift in demand in the same period (2 points); 3. How existing firms will react to the entry/exits of new firms in the next period. (1 point.) Graph requirements: 1) Axes are straight lines with labels 2) Labels and subscripts on all curves, prices, and quantities: - $1, D1, P1, Q1 to denote the starting position Use labels $2, D2, P2, Q2 only when there is a change from the starting position 3) When something changes within one graph, arrows showing the direction of change (for example, S1 -> S2 or S2Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started