Suppose instead the titanium market in Problem 2, with no tax but a price floor at $4/oz, suffers a reduction in supply because of dwindling titanium reserves. The new supply curve is P = 2 + Q. How does excess supply change due to the reduction in supply? Is the price floor still binding (does it cause price to rise from its equilibrium level)?
Answer to relevant QuestionsSuppose state government levies a tax of $9 on each DVD sold, collected from sellers. a. What quantity of DVDs will be sold in equilibrium? b. What price do buyers pay? c. How much do buyers now spend in total? d. How much ...For the tax described in Problem 5, a. What fraction of the tax does the seller bear? b. What fraction of the tax does the buyer bear?Martha has $150 to spend each week and cannot borrow money. She buys malted milk balls and the composite good. Suppose that malted milk balls cost $2.50 per bag and the composite good costs $1 per unit.a. Sketch Martha’s ...Paula, a former actress, spends all her income attending plays and movies and likes plays exactly three times as much as she likes movies.a. Draw her indifference map.b. Paula earns $120/wk. If play tickets cost $12 each and ...Consider two Italian restaurants located in identical towns 200 miles apart. The restaurants are identical in every respect but their tipping policies. At one, there is a flat $15 service charge, but no other tips are ...
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