Problem 1
Many people are concerned about the rising price of gasoline. Suppose that government officials are thinking of capping the price of gasoline below its current price. Which of the following outcomes do you predict will result from this policy? Check all that apply. [LO 6.1] a. Drivers will purchase more gasoline. b. Quantity demanded for gasoline will increase. c. Long lines will develop at gas stations. d. Oil companies will work to increase their pumping capacity.
Problem 4
The Organization for the Promotion of Brussels Sprouts has convinced the government of Ironia to institute a price floor on the sale of brussels sprouts, at \(\$ 8\) per bushel. Demand is given by \(\mathrm{P}=9-\mathrm{Q}\) and supply by \(\mathrm{P}=2 \mathrm{Q}\), where \(\mathrm{Q}\) is measured in thousands of bushels. [LO 6.2\(]\) a. What will be the price and quantity of brussels sprouts sold at market equilibrium? b. What will be the price and quantity sold with the price floor? c. How big will be the excess supply of brussels sprouts produced with the price floor?
Problem 9
Suppose government offers a subsidy to laptop sellers. Say whether each group of people gains or loses from this policy. [LO 6.4\(]\) a. Laptop buyers. b. Laptop sellers. c. Desktop computer sellers (assuming that they are different from laptop manufacturers). d. Desktop computer buyers.
Problem 10
Suppose that for health reasons, the government of the nation of Ironia wants to increase the amount of broccoli citizens consume. Which of the following policies could be used to achieve the goal? \([\mathrm{LO} 6.1,6.4]\) a. A price floor to support broccoli growers. b. A price ceiling to ensure that broccoli remains affordable to consumers. c. A subsidy paid to shoppers who buy broccoli. d. A subsidy paid to farmers who grow broccoli.
Problem 11
The following scenarios describe the price elasticity of supply and demand for a particular good. In which scenario will a subsidy increase consumption the most? Choose only one. [LO 6.5] a. Elastic demand, inelastic supply. b. Inelastic demand, inelastic supply. c. Elastic demand, elastic supply. d. Inelastic demand, elastic supply.
Problem 12
The following scenarios describe the price elasticity of supply and demand for a particular good. All else equal (equilibrium price, equilibrium quantity, and size of the \(\operatorname{tax}\) ), in which scenario will government revenues be the highest? Choose only one. [LO 6.5] a. Elastic demand, inelastic supply. b. Inelastic demand, inelastic supply. c. Elastic demand, elastic supply. d. Inelastic demand, elastic supply.
