12 May ARE DOMESTIC PRODUCERS BETTER OR WORSE OFF AS A RESULT OF THE QUOTA?
Which of the following are actions the
government could take to induce firms in this industry to produce the socially
efficient level of output.
Instructions:
You may
select more than one answer. Click the box with a check mark for the correct
answers and click twice to empty the box for the wrong answers. You must click
to select or deselect each option in order to receive full credit.
Nonrival consumptionPollution permitsPollution taxes#3As the manager of a monopoly, you face
potential government regulation. Your inverse demand isP= 30 – 1Q,and your costs areC(Q) = 6Q.
a. Determine the monopoly price and output.
Monopoly price: $
Monopoly output:units
b. Determine the socially efficient price and
output.
Socially efficient price: $
Socially efficient output:units
c. What is the maximum amount your firm should
be willing to spend on lobbying efforts to prevent the price from being
regulated at the socially optimal level?
$#4Consider a competitive market served by many
domestic and foreign firms. The domestic demand for these firms product isQd= 900 – 1.5P.The supply function of the domestic
firms isQSD=200 + 0.5P,while that of the foreign firms isQSF= 200.
Instructions:Round your answers for equilibrium price to the nearest penny
(two decimal places). Round your answers for equilibrium quantity to one
decimal place.
a. Determine the equilibrium price and quantity
under free trade.
Equilibrium price: $
Equilibrium quantity:units
b. Determine the equilibrium price and quantity
when foreign firms are constrained by a 100-unit quota.
Equilibrium price: $
Equilibrium quantity:units
c. Are domestic consumers better or worse off as
a result of the quota?
d. Are domestic producers better or worse off as
a result of the quota?
#5Enrodes
is a monopoly provider of residential electricity in a region of northern
Michigan. Total demand by its 3 million households is Qd =
1,500 – 2P, and Enrodes can produce electricity at a constant
marginal cost of $4 per megawatt hour. Consumers in this region of Michigan
have recently complained that Enrodes is charging too much for its services. In
fact, a few consumers are so upset that theyre trying to form a coalition to
lobby the local government to regulate the price Enrodes charges.
If all the consumers of this region joined the
coalition against Enrodes, how much would each consumer be willing to spend to
lobby the local government to regulate Enrodess price?
Instruction: Round your answer to the
nearest penny (two decimal places).
$
True or false: The consumers are likely
to be successful in their efforts.
FalseTrue#6Suppose that, prior to the passage of the Truth
in Lending Simplification Act and Regulation Z, the demand for consumer loans
was given by Qdpre-TILSA = 10 -80P (in billions of dollars) and the supply of
consumer loans by credit unions and other lending institutions was QSpre-TILSA = 4 + 120P (in billions of dollars). The TILSA now
requires lenders to provide consumers with complete information about the
rights and responsibilities of entering into a lending relationship with the
institution, and as a result, the demand for loans increased to Qdpost-TILSA = 16 -80P (in billions of dollars). However, the TILSA
also imposed compliance costs on lending institutions, and this reduced the
supply of consumer loans to QSpost-TILSA = 2 +
120P (in billions of dollars). Based on this information, compare the
equilibrium price and quantity of consumer loans before and after the Truth in
Lending Simplification Act.(Note:Q is measured in billions of dollars and P is the interest
rate).
Instruction: Report your answers for the equilibrium price in percentage terms, and
round all answers to one decimal place.
Equilibrium price (interest rate) before TILSA:percent
Equilibrium quantity (in billions of dollars)
before TILSA: $billion
Equilibrium price (interest rate) after TILSA:percent
Equilibrium quantity (in billions of dollars)
after TILSA: $billion
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