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Instructions: Enter your answers as a whole number.

1. What are the equilibrium price and quantity for the data displayed in the two tables?

    bag(s)

2. Instead of bags of oranges, assume that the data in the two tables deal with a good (such as fireworks displays) that can be enjoyed by free riders who do not pay for it. If all the buyers in the two tables free ride, what quantity will private sellers supply?

3. Assume that we are back to talking about bags of oranges (a private good), but the government has decided that tossed orange peels impose a negative externality on the public that must be rectified by imposing a tax of $2-per-bag on sellers. What is the new equilibrium price?

   $

   What is the new equilibrium quantity?

    bag(s)

   If the new equilibrium quantity is the optimal quantity, by how many bags were oranges being overproduced before?

    bag(s)

Transcribed Image Text:

Refer to the two tables below, which show, respectively, the willingness to pay and the willingness to accept of buyers and sellers of individual bags of oranges. For the following questions, assume that the equilibrium price and quantity depend on the following changes in supply and demand. Also assume that the only market participants are those listed by name in the two tables. In addition, assume that each seller is only able to sell one bag of oranges and each buyer is only able to buy one bag of oranges during the period represented by the data in the tables. Further, assume that the equilibrium price is known to all participants in the market. Person Bashir Barb Bill Beeja Brent Blessing Consumers Maximum Price Willing To Pay $ 13 12 11 10 9 8 Actual Price (Equilibrium Price) $8 8 8 8 8 8 Person Chander Chaaya Chuck Chazen Chuma Chad Producers Minimum Acceptable Price $3 4 5 6 7 8 Actual Price (Equilibrium Price) $8 8 8 8 8 8 Refer to the two tables below, which show, respectively, the willingness to pay and the willingness to accept of buyers and sellers of individual bags of oranges. For the following questions, assume that the equilibrium price and quantity depend on the following changes in supply and demand. Also assume that the only market participants are those listed by name in the two tables. In addition, assume that each seller is only able to sell one bag of oranges and each buyer is only able to buy one bag of oranges during the period represented by the data in the tables. Further, assume that the equilibrium price is known to all participants in the market. Person Bashir Barb Bill Beeja Brent Blessing Consumers Maximum Price Willing To Pay $ 13 12 11 10 9 8 Actual Price (Equilibrium Price) $8 8 8 8 8 8 Person Chander Chaaya Chuck Chazen Chuma Chad Producers Minimum Acceptable Price $3 4 5 6 7 8 Actual Price (Equilibrium Price) $8 8 8 8 8 8