Government intervention

What is consumer spending after the tax?

• P1 x Q1

• Q2 x P2

• Q2 x b

• P1 x Q2

What is producer revenue after the tax?

• P1 x Q1

• Q2 x P2

• Q2 x b

• P1 x Q2

How much of a shortage is created because of the maximum price?

• Q2

• Q1

• Q2 - Q1

• Qe

Allocative inefficiency occurs when

• All of the above

What will be the cost to government if they choose to buy the surplus?

• 30 X 4

• 40 x 4

• 20 x 4

• 50 x 4

What is the welfare loss/DWL as a consequence of the price floor?

• $0.5m

• $3m

• $2m

• $1m

What is the consumer surplus after in the introduction of the price floor?

• $20m

• $30m

• $6m

• $25m

What is government revenue from the indirect tax?

• Pc x Qt

• (Pc - Pp) x Qt

• (Pp- Pc) x Qt

• Pc x Q*