ONLINECO 

1. Lovers of classical music persuade Congress to impose a price of $40 per ticket. Does this policy get more or fewer people to attend classical music concerts?

 

2. The government has decided that the free-market price of cheese is too low.A. Suppose the government imposes a binding price floor in the cheese market. Use a supply-and-demand diagram to show the effect of this policy on the price of cheese and the quantity of cheese sold. Is there a shortage or surplus of cheese? b. Farmers complain that the price floor has reduced their total revenue. Is this possible? Explain c. In response to farmers’ complaints, the government agrees to purchase all of the surplus cheese at the price floor. Compared to the basic price floor, who benefits from this new policy? Who loses?

 

3. A recent study found that the demand and supply schedules for Frisbees are as follows:a. What are the equilibrium price and quantity of Frisbees?

 

4. Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. (In fact, both the federal and state governments impose beer taxes of some sort.)a. Draw a supply-and-demand diagram of the market for beer without the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers?B. Draw a supply-and-demand diagram of the market for beer with the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? Has the quantity of beer sold increased or decreased?

 

5. A senator Wants to raise tax revenue and make workers better off. A staff member proposes raising the payroll tax paid by firms and using part of the extra revenue to reduce the pay roll tax paid by workers. Would this accomplish the senator’s goal? 6. If the government places a $500 tax on luxury cars, will the price paid by consumers rise by more than $500, less than $500, or exactly $500? Explain.