The government is considering passing a regulation that will prohibit the use of a certain chemical in the production of gbod XYZ because of its damaging environmental effects. It is estimated that because of this regulation which will stop manufacturers of good XYZ from using this chemical, the price of good XYZ will increase from $5 to $6. It is also estimated that because of the higher price 2 million fewer units of XYZ will be sold. (Currently with P $5, 6 million units are sold.) Which of the following best describes the lkely autcome of this regulation in the market of good XYZ, if everything else stays the same except for this price change? Consumer surplus will decrease by $5 million. Consumer surplus will decrease by $10 milion Consumer surplus will decrease by $1 million. Consumer surplus will decrease by $4 million. none of the above

The government is considering passing a regulation that will prohibit the use of a certain chemical in the production of gbod XYZ because of its damaging environmental effects. It is estimated that because of this regulation which will stop manufacturers of good XYZ from using this chemical, the price of good XYZ will increase from $5 to $6. It is also estimated that because of the higher price 2 million fewer units of XYZ will be sold. (Currently with P $5, 6 million units are sold.) Which of the following best describes the lkely autcome of this regulation in the market of good XYZ, if everything else stays the same except for this price change? Consumer surplus will decrease by $5 million. Consumer surplus will decrease by $10 milion Consumer surplus will decrease by $1 million. Consumer surplus will decrease by $4 million. none of the above

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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