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. Laws that limit interstate sale of wine over the Internet were relaxed significantly as a result of a Supreme Court decision in 2005. How would you expect this to...

Question

. Laws that limit interstate sale of wine over the Internet were relaxed significantly as a result of a Supreme Court decision in 2005. How would you expect this to affect the scale of production in the wine industry?

. Laws that limit interstate sale of wine over the Internet were relaxed significantly as a result of a Supreme Court decision in 2005. How would you expect this to affect the scale of production in the wine industry?



Answers

Why might one administration interpret and enforce the antitrust laws more strictly than another? How might a change of administrations affect a major monopoly case in progress?

Hello, everyone. I want to discuss why the government might want to influence the supply of alcohol and tobacco so they can. They can change the supply through enforcing excise taxes and ah, reason they might do this is to decrease the supply of these drugs. And there are some reasons as to why the government might do this. One might be health reasons. They want to reduce the abuse. Three of these drugs. It could be a political reason, but also they might need a source of revenue because any any form of tax goes to the government.

So this graph here shows Canada when the world price is below the otherwise prevailing equilibrium price. If we only had a domestic supply and domestic demand of wine. So what you can see is that the producer surplus is going to grow because the price has fallen from competition around the world and the producer surplus has fallen. All right, So let's actually illustrate some of these things in a table you can see with trade. That's right here. Consumer surpluses, A, B and D. So going back to our graph here you can see a B and E and the producer surpluses only. See why is it only see because that is the only area below the world price. The total surplus therefore A, B, C and D, A, B, C and D. And the reason D is included again is because those air domestic consumers who are able to purchase foreign wines All right, so we have our consumer surplus. Our producer surplus are total surplus. We're all good on that now. The next part is supposed that there's a large destruction of the world's supply, so not Canada supply, but the world's supply. What is that going to do to the price. Well, let's imagine that it causes the world price to go up to the previously domestic equilibrium level in Canada. It could go up less than that. It could go up much more than that, but it's definitely going up. What is that going to do in Canada? It is going to decrease the consumer surplus and increase the producer surplus. And it's also going to decrease total surplus if we just put it right at the domestic equilibrium level, though the new world price, that makes it a little simple in terms of the A B C D areas that we need to look at. Okay, so let's do that here. The world price goes up. Consumer surplus is now on Lee going to be a this region right here. The producer surplus is now going to B B and C, This area in here and the total surplus they're forced A, B and C. So what has been the change? This last column here will consumer surplus lost be in D, right? Be went to the producer shirt. Plus, Andy is just lost. The producer surplus gained, Be as we saw here and the total surplus, therefore, has declined by sea. All right, so who are the winners? Who are the losers? Is Canada better or worse, off as a whole? Will The winners are going to be the domestic producers in Canada, right? Because they get to sell more of their product to their fellow Canadians at a higher price. Who are the losers? The domestic consumers of wine in Canada because they can no longer purchase the imported wine at a cheaper price. So is Canada as a whole? Better or worse, off the reason candidate is worse off is because they have lost part of their total surplus. So as far as this component be goes right, if all that happens is be changes hands between consumers and producers, Canada as a whole is no better or soft. The key is that they have lost this component D. So if we look back on the graph, that component D is now gone in the same way that attacks creates a dead weight loss, and part of that free exchange disappears

In some states, there are laws against price increases after major disasters for certain supplies. So let's suppose that before this disaster, we had a market equilibrium for these supplies that sat at p. one. But now this natural disaster hits, and it's difficult to get supplies. So supply is going to shift to the left. We see this decrease in supply shifting from S. One to S. Two, which gives us a new equilibrium right here. Now, at this new equilibrium point, what we see is we have a much higher price because supplies are hard to get. So suppliers choose to charge a higher price. But what some states do is choose not to allow these these suppliers to actually charge at this price of P. Two, and instead they may keep the price somewhere at let's suppose back at its initial equilibrium at P. One. So let's suppose that this is this price ceiling that these laws have in place. So we now have a price ceiling which gives us kind of conflicting quantities. What we see is at this price ceiling. This would be our quantity supplied, which sets all the way down here, even though the quantity demanded is much larger. So what we see as a result of these laws, is a bit of a shortage or otherwise, excess demand. And the reason we see this is because look at the difference between quantity demanded in quantity supplied, We see immediately that quantity demanded far exceeds quantity supplied. And it's simply because these suppliers aren't allowed to charge a price at this equilibrium, which they would otherwise like to do, based on that shift in the supply curve, which we looked at first. This leftward shift of the supply curve would like for the market to clear at this equilibrium point. But these laws against price increases after major disasters impose this price ceiling, which sits in here restricting these suppliers from actually pricing their products at that natural equilibrium. Now, just for information, this is something typically called Price Gouging in cases where suppliers charge more unfair prices after a natural disaster, simply because they can, and that's typically what these laws are working against. However, price gouging is not in play and it's simply a higher price due to equilibrium, it tends to be inefficient as it results in this shortage and therefore excess demand.

Okay, So we've been in this time. I mean more. Nobody. Okay. What is the situation? Both It is the situation off the because of me in which single form orders I just market cheer. Okay, so there's an example we have when those that is the popular unique understand the concept off. Okay, so as we all is, all we know that Windows is them by Microsoft. OK, it is just an operating system that runs your machine. Okay, It is on some romance systemsoft. So Microsoft or delay just shake it off? I think so. Simple in the industrial. Okay, now sorted by that, let's suppose there is only a Microsoft. OK, there is only a Microsoft in the whole economy for producing the operating system that runs on every day. So the phone will be bright second. Okay, So that is the actual concern off, Godman that if they will be a monopoly power in many called me. Okay, So David price discrimination. But I setting okay, because if they will be only one from the market, then he will enjoy what the phone will enjoy. Mostly all of the benefits consumers will be. Act risk. Ok, So now, government boys administrator, or we can say agency who enforce laws. Radiation off. You're nobody. Oh, okay. See, government is different cast. You can say a lot off. So what? It does it free and the laws. Okay, get it bust by the, you know, signature of dependent. And afterwards it appoints the agency. And it's different employees who enforce the particular act. But a particulate matter. Okay, there is food conservation and energy Act 2008 on it is Sherman and later on acts. Okay, so different agencies will be appointed. Okay, Deputy needs off the laws and rules. Okay, however, administer border administered who it takes on the Okay, it takes up the application off the forms which are being received. You know who give attention to the matters for which the act has been bust. Okay, but visitor you dollars has been bust. Okay, so administrator will perform their function more more efficiently and with more accountability than any of the evidence. Okay, even the private agency does OK, but what happens then? They will be changing at Mr. You can understand that administrative mostly would be a person would be a you know, agency. And so let's suppose it is handling that Mr Cameron agency is hanging okays off a very you know, Powerful and Dippenaar. Okay, so and data allegations on their entrepreneur so that so that alligators are correct. But now what happens? They did start in Changing was a gentle Ben. Mr. So there is a transfer of Administrator who? Emma. Jurisdiction. So they will. We see this implications on the case now, case will be another effect off. Case will be just lived. Oppose it. But what it was. Okay, so they will be serious implications. Serious implications on enforcement. Okay, because now, if you're supposed that, if they did uncertain and changing position on Mr Of Course, they'll be They will be a corruption. They will be a correction element in Lord and Dark matter. Okay, That is why it has caused Gene connect Mistake position. Ok, so we have concluded. Or and we haven't district the meaning Lost monopoly bordered by that boys responsible. Okay, who is irresponsible for establishing the act? Ok, so that is all we have put on a solution. Thank you


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