Suppose you have the following information about production levels ofIbs. of caviar and bottles of wine, and the market-clearing prices for eachof the nine allocations:5.CaviarWinePricecaviarPricewineGDPAllocation$50,00050,00050,00050,00050,00050,00050,00050,00050,000$166.67187.50$350.00175.00A90100B80200214.29250.00300.00116.6787.507030060400E5050070.00375.00500.0058.3350.00F40600G30700H20800750.0043.75I109001500.0038.89A. How much wine must be sacrificed to produce 1 more lb. of caviar?B. Is allocation point A efficient? (As in class, prove your conclusion with math)C. Which allocation point is efficient? (As in class, prove your conclusion withmath)D. Suppose government assesses a tax of $40 per bottle of wine, but no tax on caviar.i)what will be the new equilibrium? Why?ii)how much of the tax is forward shifted? Explainiii)how much of the tax is backward shifted? Explain

Suppose you have the following information about production levels of Ibs. of caviar and bottles of wine, and the market-clearing prices for each of the nine allocations: 5. Allocation Caviar Wine Pricecaviar Pricewine GDP $50,000 50,000 50,000 50,000 50,000 50,000 $350.00 $166.67 187.50 90 100 175.00 200 300 80 214.29 250.00 300.00 70 116.67 60 400 87.50 50 500 70.00 F 40 600 375.00 58.33 ABCDE

Suppose you have the following information about production levels of Ibs. of caviar and bottles of wine, and the market-clearing prices for each of the nine allocations: 5. Allocation Caviar Wine Pricecaviar Pricewine GDP $50,000 50,000 50,000 50,000 50,000 50,000 $350.00 $166.67 187.50 90 100 175.00 200 300 80 214.29 250.00 300.00 70 116.67 60 400 87.50 50 500 70.00 F 40 600 375.00 58.33 ABCDE

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 51CTQ: Why would a free market mar operate at a quantity greater than the equilibrium quantity? Hint: What...

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Why would a free market mar operate at a quantity greater than the equilibrium quantity? Hint: What would be required for at transaction to occur at that quantity?
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