1.In Figure 21.6 on page 472, the taxi medallion policy prevents mutually beneficial transactions for consumers on the demand curve between points
and
and producers on the supply curve between points
and .
fig.21.6
2. In Figure 21.6 on page 472, a consumer who is on the demand curve halfway between points c and a would be willing to pay $
for a mile of taxi service, while a supplier who is halfway between points b and a on the supply curve would be willing to supply a mile of taxi service at a price of
$ .
fig.21.6
3.In Figure 21.7 on page 474, domestic firms will producetons of sugar at a price of $0.15, tons at a price of $0.30, andtons at a price of $0.28.
fig.21.7
4. Arrow up or down: An import banthe price of sugar
, the total (market) quantity of sugar, and
the quantity of sugar produced by domestic firms.
5. A recent study estimates that simultaneous liberalization of trade in all products would generate an annual benefit of
. (Related to Application 4 on page 475.)
6. Compute the Changes. Consider the example of taxi medallions shown in Figure 21.6 on page 472.
a. The policy changes consumer surplus from $
to $
.
b. The policy changes producer surplus from $ to $ .
c. The policy changes the total surplus of the market from $
to $
.
d. The deadweight loss is shown by the area of triangle , which equals $
.