The demand and supply of pickles are given by QD = 300 - 500P and QS = 400P - 150, where P is the price per pickle and Q measures the quantity of pickles in millions. Suppose the government creates a subsidy of $0.25 per pickle. Which of the following statements are TRUE?
I. Without the subsidy, the equilibrium quantity of pickles is 75 million.
II. With the subsidy, consumers pay 38.9 cents per pickle.
III. With the subsidy, producers receive 75 cents per pickle.
IV. With the subsidy, the equilibrium quantity of pickles is greater than 100 million.
A) II, III, and IV
B) I and III
C) II and IV
D) I, III, and IV
Correct Answer:
Verified
Q1: Deadweight loss can be calculated as:
A)
Q2: (Figure: Market for Tickets II) Before the
Q3: (Figure: Market for Good X II) Before
Q4: (Figure: Price and Quantity IV) Suppose the
Q6: (Figure: Market for Tickets II) The size
Q7: (Figure: Market for Tickets II) The government
Q8: Consumer surplus can be calculated as:
A)
Q9: If the government subsidizes a product, what
Q10: (Figure: Price and Quantity V) For demand
Q11: To calculate producer surplus:
A) integrate the area
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