微觀經(jīng)濟學（平狄克、魯賓費爾德）第六版課后答案--微觀經(jīng)濟學英文原版--CH09_PINDYCK

1、Chapter 9The Analysis of Competitive MarketsTopics to be DiscussedEvaluating the Gains and Losses from Government PoliciesThe Efficiency of a Competitive MarketMinimum Prices Price Supports and Production QuotasImport Quotas and TariffsThe Impact of a Tax or Subsidy2Consumer and Producer SurplusWhen

2、 government controls price, some people are better offMay be able to buy a good at a lower priceBut what is the effect on society as a whole?Is total welfare higher or lower and by how much?A way to measure gains and losses from government policies is needed3Consumer and Producer SurplusConsumer sur

3、plus is the total benefit or value that consumers receive beyond what they pay for the goodAssume market price for a good is $5Some consumers would be willing to pay more than $5 for the goodIf you were willing to pay $9 for the good and pay $5, you gain $4 in consumer surplus4Consumer and Producer

4、SurplusThe demand curve shows the willingness to pay for all consumers in the marketConsumer surplus can be measured by the area between the demand curve and the market priceConsumer surplus measures the total net benefit to consumers5Consumer and Producer SurplusProducer surplus is the total benefi

5、t or revenue that producers receive beyond what it costs to produce a goodSome producers produce for less than market price and would still produce at a lower priceA producer might be willing to accept $3 for the good but get $5 market priceProducer gains a surplus of $26Consumer and Producer Surplu

6、sThe supply curve shows the amount that a producer is willing to take for a certain amount of a goodProducer surplus can be measured by the area between the supply curve and the market priceProducer surplus measures the total net benefit to producers7Consumer and Producer SurplusBetween 0 and Q0 pro

7、ducers receive a net gain from selling each product-producer surplus.ConsumerSurplusQuantityPriceSDQ059Between 0 and Q0 consumer A receives a net gain from buying the product- consumer surplus.ProducerSurplus3QDQS8Consumer and Producer SurplusTo determine the welfare effect of a governmental policy,

8、 we can measure the gain or loss in consumer and producer surplusWelfare EffectsGains and losses to producers and consumers9Consumer and Producer SurplusWhen government institutes a price ceiling, the price of a good cant go above that priceWith a binding price ceiling, producers and consumers are a

9、ffectedHow much they are affected can be determined by measuring changes in consumer and producer surplus10Consumer and Producer SurplusWhen price is held too low, the quantity demanded increases and quantity supplied decreasesSome consumers are worse off because they can no longer buy the goodDecre

10、ase in consumer surplusSome consumers are better off because they can buy it at a lower priceIncrease in consumer surplus11Consumer and Producer SurplusProducers sell less at a lower priceSome producers are no longer in the marketBoth of these producer groups lose and producer surplus decreasesThe e

11、conomy as a whole is worse off since surplus that used to belong to producers or consumers is simply gone12The loss to producers is the sum of rectangle A and triangle CBACConsumers that can buy the good gain APrice Control and Surplus ChangesQuantityPriceSDP0Q0PmaxQ1Q2Consumers that cannot buy, los

12、e BTriangles B and C are losses to society dead weight loss13Price Controls and Welfare EffectsThe total loss is equal to area B + CThe deadweight loss is the inefficiency of the price controls the total loss in surplus (consumer plus producer)If demand is sufficiently inelastic, losses to consumers

13、 may be fairly largeThis can have effects in political decisions14BAPmaxCQ1With inelastic demand, triangle B can be larger than rectangle A and consumers suffer net losses from price controls.SDPrice Controls With Inelastic DemandQuantityPriceP0Q215Price Controls and Natural Gas ShortagesFrom exampl

14、e in Chapter 2, 1975 Price controls created a shortage of natural gasWhat was the effect of those controls?Decreases in surplus and overall loss for societyWe can measure these welfare effects from the demand and supply of natural gas16Price Controls and Natural Gas ShortagesQS = 14 + 2PG + 0.25POQu

15、antity supplied in trillion cubic feet (Tcf)QD = -5PG + 3.75POQuantity demanded (Tcf)PG = price of natural gas in $/mcfPO = price of oil in $/b17Price Controls and Natural Gas ShortagesUsing PO = $8/b and gives equilibrium values for natural gasPG = $2/mcf and QG = 20 TcfPrice ceiling was set at $1/

16、mcfShowing this graphically, we can see and measure the effects on producer and consumer surplus18BACThe gain to consumers is rectangle A minus triangle B, and the loss to producers is rectangle A plus triangle C.SD2.002.40Price($/mcf)Quantity (Tcf)05101520253018(Pmax)1.00Price Controls and Natural

17、Gas Shortages19Price Controls and Natural Gas ShortagesMeasuring the Impact of Price ControlsA = (18 billion mcf) x ($1/mcf) =$18 billionB = (1/2) x (2 b. mcf) x ($0.40/mcf) =$0.4 billionC = (1/2) x (2 b. mcf) x ($1/mcf) =$1 billion20Price Controls and Natural Gas ShortagesMeasuring the Impact of Pr

18、ice Controls in 1975Change in consumer surplus = A - B = 18 - 0.4 = $17.6 billion GainChange in producer surplus= A + C = 18 + 1 = $19.0 billion LossDead Weight Loss= B + C = 0.4 + 1 = $1.4 billion Loss21The Efficiency ofa Competitive MarketIn the evaluation of markets, we often talk about whether i

19、t reaches economic efficiencyMaximization of aggregate consumer and producer surplusPolicies such as price controls that cause dead weight losses in society are said to impose an efficiency cost on the economy22The Efficiency ofa Competitive MarketIf efficiency is the goal, then you can argue that l

20、eaving markets alone is the answerHowever, sometimes market failures occurPrices fail to provide proper signals to consumers and producersLeads to inefficient unregulated competitive market23Types of Market FailuresExternalitiesCosts or benefits that do not show up as part of the market price (e.g.

21、pollution)Costs or benefits are external to the marketLack of InformationImperfect information prevents consumers from making utility-maximizing decisionsGovernment intervention may be desirable in these cases24The Efficiency of a Competitive MarketOther than market failures, unregulated competitive

22、 markets lead to economic efficiencyWhat if the market is constrained to a price higher than the economically efficient equilibrium price?25BACPrice Control and Surplus ChangesQuantityPriceSDP0Q0PminQ1Q2When price is regulated to be no lower than Pmin, the deadweight loss given by triangles B and C

23、results.26The Efficiency of a Competitive MarketDeadweight loss triangles B and C give a good estimate of the efficiency cost of policies that force price above or below market clearing priceMeasuring effects of government price controls on the economy can be estimated by measuring these two triangl

24、es27The Market for Human KidneysThe 1984 National Organ Transplantation Act prohibits the sale of organs for transplantationWhat has been the impact of the Act?We can measure this using the supply and demand for kidneys from estimated dataSupply: QS = 8,000 + 0.2PDemand: QD = 16,000 - 0.2P28The Mark

25、et for Human KidneysSince the sale of organs is not allowed, the amount available depends on the amount donatedSupply of donated kidneys is limited to 8,000The welfare effect of this supply constraint can be analyzed using consumer and producer surplus in the kidney market29The Market for Human Kidn

26、eysSuppliers:Those who supply them are not paid the market price, estimated at $20,000Loss of surplus equal to area A = $160 millionSome who would donate for the equilibrium price do not donate in the current marketLoss of surplus equal to area C = $40 millionTotal consumer loss of A + C = $200 mill

27、ion30The Market for Human KidneysRecipients:Since they do not have to pay for the kidney, they gain rectangle A ($140 million) since price is $0Those who cannot obtain a kidney lose surplus equal to triangle B ($40 million)Net increase in surplus of recipients of $160 - $40 = $120 millionDead Weight

28、 Loss of C + B = $80 million31The Market for Human KidneysOther Inefficiency CostsAllocation is not necessarily to those who value the kidneys the mostPrice may increase to $40,000, the equilibrium price, with hospitals getting the price32DA and D measure the total value of kidneys when supply is co

29、nstrained.ACThe loss to suppliersis seen in areas A & C.The Market for KidneysQuantityPrice4,0000$10,000$30,000$40,0008,000SBIf kidneys are zero cost, consumer gain would be A minus B.SD12,000$20,00033The Market for Human KidneysArguments in favor of prohibiting the sale of organs:Imperfect informat

30、ion about donors health and screening Unfair to allocate according to the ability to payHolding price below equilibrium will create shortagesOrgans versus artificial substitutes34Minimum PricesPeriodically, government policy seeks to raise prices above market-clearing levelsMinimum wage lawRegulatio

31、n of airlinesAgricultural policiesWe will investigate this by looking at the minimum wage legislation35Minimum PricesWhen price is set above the market clearing price:Quantity demanded fallsSuppliers may, however, choose to increase quantity supplied in face of higher pricesThis causes additional pr

32、oducer losses equal to the total cost of production above quantity demanded36Minimum PricesLosses in consumer surplus are still the sameIncreased price leading to decreased quantity equals area AThose priced out of the market lose area BProducer surplus similarIncreases from increased price for unit

33、s sold equal to ALosses from drop in sales equal to C37Minimum PricesWhat if producers expand production to Q2 from the increased price?Since they only sell Q3, there is no revenue to cover the additional production (Q2-Q3)Supply curve measures MC of production so total cost of additional production

34、 is area under the supply curve for the increased production (Q2-Q3) = area DTotal change in producer surplus = A C D38BAThe change in producersurplus will beA - C - D. Producersmay be worse off.CDMinimum PricesQuantityPriceSDP0Q0Q3Q2PminIf producers produce Q2, the amount Q2 - Q3will go unsold.D me

35、asures total cost of increased production not sold.39Minimum WagesWage is set higher than market clearing wageDecreased quantity of workers demandedThose workers hired receive higher wagesUnemployment results, since not everyone who wants to work at the new wage can40BThe deadweight lossis given by

36、triangles B and C.CAL1L2UnemploymentwminFirms are not allowed topay less than wmin. Thisresults in unemployment.SDw0L0The Minimum WageLwA is gain to workers who find jobs at higher wage.41Airline RegulationBefore 1970, the airline industry was heavily regulated by the Civil Aeronautics Board (CAB)Du

37、ring 1976-1981, the airline industry in the U.S. changed dramatically as deregulation led to major changesSome airlines merged or went out of business as new airlines entered the industry42Airline RegulationAlthough prices in the industry fell considerably (helping consumers), profits did not.Regula

38、tion caused significant inefficiencies and artificially high costsWe can show the effects of this regulation by looking at the effects on surplus from the controlled prices43BACAfter deregulation:Prices fell to PO. Thechange in consumer surplus is A + B.Q3DArea D is the costof unsold output.Effect o

39、f Airline RegulationQuantityPriceSDP0Q0Q1PminQ2Prior to deregulationprice was at Pmin. Production was Q3 hoping to outsell competitors.44Airline Industry Data45Airline Industry DataAirline industry data show:Long-run adjustment as the number of carriers increased and prices decreasedHigher load fact

40、ors indicating more efficiency Falling ratesReal cost increased slightly (adjusted fuel cost)Large welfare gain46Price SupportsMuch of agricultural policy is based on a system of price supportsPrices set by government above free-market level and maintained by governmental purchases of excess supplyG

41、overnment can also increase prices through restricting production, directly or through incentives to producers47Price SupportsWhat are the impacts on consumers, producers and the federal budget?ConsumersQuantity demanded falls and quantity supplied increasesGovernment buys surplusConsumers must pay

42、higher price for the goodLoss in consumer surplus equal to A+B48Price SupportsProducersGain since they are selling more at a higher priceProducer surplus increases by A+B+DGovernmentCost of buying the surplus, which is funded by taxes, so indirect cost on consumersCost to government = (Q2-Q1)PS49Pri

43、ce SupportsGovernment may be able to “dump” some of the goods in the foreign marketsHurts domestic producers that government is trying to help in the first placeTotal welfare effect of policyCS + PS Govt. cost = D (Q2-Q1)PSSociety is worse off overallLess costly to simply give farmers the money50BDA

44、To maintain a price Psthe government buys quantity Qg . D + QgQgPrice SupportsQuantityPriceSDP0Q0PsQ2Q1ENet Loss to society is E + B.51Production QuotasThe government can also cause the price of a good to rise by reducing supplyLimitations of taxi medallions in New York CityLimitation of required li

45、quor licenses for restaurants52BACS reduced by A + BChange in PS = A - CDeadweight loss = BCCSupply RestrictionsQuantityPriceDP0Q0SSPSQ1Supply restricted to Q1Supply shifts to S & Q153Supply RestrictionsIncentive ProgramsUS agricultural policy uses production incentives instead of direct quotasGover

46、nment gives farmers financial incentives to restrict supplyAcreage limitation programsQuantity decreases and price increases for the crop54Supply RestrictionsIncentive ProgramGain in PS of A from increased price of amount soldLoss of PS of C from decreased productionGovernment pays farmers not to pr

47、oduceTotal PS = A C + payments from Govt.Government must pay enough to keep producers from producing more at the higher priceEquals B+C+D 55DBACS reduced by A + BCSupply RestrictionsQuantityPriceDP0Q0SSQ1Cost to government = B + C + D= additional profit made if producing Q0 at PSPSChange in PS = A +

48、 B + D56Supply RestrictionsWhich program is more costly?Both programs have same loss to consumersProducers are indifferent between programs because end up with same amount in bothTypically, acreage limitation programs cost society less than price supports maintained by government purchasesHowever, s

49、ociety is better off if government would just give farmers cash57Supporting the Price of WheatFrom previous example, the supply and demand for wheat in 1981 wasSupply: QS = 1,800 + 240PDemand: QD = 3,550 - 266PEquilibrium price and quantity was $3.46 and 2,630 million bushelsGovernment raised the pr

50、ice to $3.70 through government purchases58Supporting the Price of WheatHow much would the government have had to buy to keep price at $3.70?QDTotal = QD + Qg = 3,550 - 266P + QgQS = QDT1,800 + 240P = 3,550 - 266P + QgQg = 506P - 1,750At a price of $3.70, government would buyQg = (506)(3.70) - 175 =

51、 122 million bushels59D + QgBy buying 122million bushels, the governmentincreased the market-clearing price.2,688ABCQgPS = $3.70AB consumer lossABC producer gainSDP0 = $3.462,6301,800The Wheat Market in 1981QuantityPrice2,56660Supporting the Price of WheatWe can quantify the effects on CS The change

52、 in consumer surplus = (-A -B)A = (3.70 - 3.46)(2,566) = $616 millionB = (1/2)(3.70 - 3.46)(2,630 - 2,566) = $8 millionCS = -$624 million61Supporting the Price of WheatCost to the government:$3.70 x 122 million bushels = $451.4 millionTotal cost of program = $624 + 451 = $1,075 millionGain to produc

53、ers A + B + C = $638 millionGovernment also paid 30 cents/bushel = $806 million 62Supporting the Price of WheatIn 1985, the situation became worseExport demand fell and the market clearing price of wheat fell to $1.80/bushelEquilibrium quantity was 2231The actual price, however, was $3.20To keep pri

54、ce at $3.20, the government had to purchase excess wheatGovernment also imposed a production quota of about 2425 million bushels63Supporting the Price of Wheat1985 Government Purchase: 2,425 = 2,580 - 194P + QgQg = -155 + 194PP = $3.20 - the support priceQg = -155 + 194($3.20) = 466 million bushels6

55、4The Wheat Market in 1985PriceQuantity1,800SDP0 = $1.802,232To increase theprice to $3.20, thegovernment bought 466 million bushelsand imposeda production quotaof 2,425 bushels.D + Qg1,959S2,425PS = $3.20Qg65Supporting the Price of Wheat1985 Government Cost:Purchase of Wheat = $3.20 x 466 = $1,491 m

56、illion80 cent subsidy = .80 x 2,425 = $1,940 millionTotal government program cost = $3.5 billion66Supporting the Price of WheatIn 1996, Congress passed the Freedom to Farm lawGoal was to reduce the role of government and make agriculture more market-orientedEliminated production quotas, gradually re

57、duced government purchases and subsidies through 200367Supporting the Price of WheatIn 2002, Congress and President Bush reversed the effects of the 1996 bill by reinstating subsidies for most cropsCalls for “fixed direct payments”New bill would cost taxpayers almost $1.1 billion in annual payments

58、to wheat producers alone2002 farm bill expected to cost taxpayers $190 billion over 10 yearsEstimated $83 billion over existing programs68Import Quotas and TariffsMany countries use import quotas and tariffs to keep the domestic price of a product above world levelsImport quotas: Limit on the quanti

59、ty of a good that can be importedTariff: Tax on an imported goodThis allows domestic producers to enjoy higher profitsCost to consumers is high69Import Quotas and TariffsWith lower world price, domestic consumers have incentive to purchase from abroadDomestic price falls to world price and imports e

60、qual difference between quantity supplied and quantity demandedDomestic industry might convince government to protect industry by eliminating importsQuota of zero or high tariff70QSQDPWABCQuota of zero pushes domestic price to P0 and imports go to zero.Import Tariff to Eliminate ImportsQuantityPrice