ECON1101 Chapter 2: Chapt 2 - Supply in a Perfectly Competitive Market

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cyanalpaca20

18 Jul 2018

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Both suppliers and consumers are not willing/able to equilibrium price is such that the quantity consumers want today is the same as the quantity suppliers want to sell). Market the market for a given g&s is the set of all consumers and suppliers who are willing to buy. Chapter 2 supply in a perfectly competitive market. Supply curve for an individual accrued by producing that unit. producing that unit. This refers to the opportunity cost, not just the absolute cost of producing that good. Marginal benefit the marginal benefit of producing a certain unit of a given good is the extra benefit. Marginal cost the marginal cost of producing a certain unit of a given good is the extra cost of. Cost-benefit principle an action should be taken if the marginal benefit is greater than the marginal. Quantity supplied the quantity of a given g&s that maximizes the profit of the supplier.

Related Questions

A When a perfectly competitive market reaches equilibrium, which of the following statements are true: (1. The quantity of the good supplied by suppliers is just equal to the quantity of the good that consumers wish to purchase. VII. All consumers will get to consume the amount of the good they are willing to consume at that price and all suppliers will get to supply the amount of the good they are willing to supply at that equilibrium price (111) There will be no consumers who want to change their consumption behaviour and no suppliers who wish to change their supply decisions. A) only I B only II C ) only III D I & II E) I & III F) II & III G) . II & III H) none of the three

7. When a perfectly competitive market reaches equilibrium, which of the following statements are true: I. All consumers will get to consume the amount of the good they are willing to consume at that price and all suppliers will get to supply the amount of the good they are willing to supply at that equilibrium price 11. There will be no consumers who want to change their consumption behaviour and no suppliers who wish to change their supply decisions. III. The quantity of the good supplied by suppliers is just equal to the quantity of the good that consumers wish to purchase. A) only 1 F) II & III ) I & III B) only IIC G), II & III ) only III DI & IIE H) none of the three

The market for packets of cigarettes has been described by the following supply and demand functions:

Supply: P = 10 + 4Q Demand: P = 100 - 5Q where P is the price in dollars and Q is the quantity of packets of cigarettes per month (in thousands).

Part A) Construct a graph of supply and demand for this market showing all intercepts. What are the equilibrium prices and quantities? Show these on your graph.

Part B) At the market equilibrium price, what would be the total monthly revenue?

Part C) Calculate consumer surplus at the market equilibrium and indicate this surplus as an area on your diagram.

Part D) Calculate producer surplus at the market equilibrium and indicate this surplus as an area on your diagram.

Part E) Assume that a per-unit tax of $9.00 per packet of cigarettes is imposed by the government on the suppliers of cigarettes. Depict this on your demand and supply diagram. (Hint: the new tax inclusive supply function will be: P = 19 + 4Q). What is the new market equilibrium quantity? What price will consumers now pay and what price will suppliers now receive?

Part F) How much is the government revenue from the tax on suppliers?

Part G) Calculate consumer surplus and producer surplus after the imposition of the tax and any deadweight loss associated with the tax. Indicate these surplus and tax revenue areas on your diagram. Explain what the deadweight loss represents.

Part H) Now assume that instead of imposing a per-unit tax of $9.00 per pack on the suppliers of cigarettes the government decides to apply the same per-unit tax of $9.00 on consumers. Depict this on your demand and supply diagram. (Hint: the new tax inclusive demand function will be: P = 91 - 5Q) What is the new market equilibrium quantity? What price will consumers now pay and what price will suppliers now receive? (5 marks)

Part I) How much is the government revenue from the tax on consumers? (1 mark)

Part J) Who bears the greatest burden of the tax in each case, producers or consumers? Does your answer depend on whether the tax is levied on producers or consumers?

I am really having difficulty understanding Part J - can that please be answered with some detail?

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ECON1101 Chapter 2: Chapt 2 - Supply in a Perfectly Competitive Market

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