Question

In the market for widgets, the supply curve is the typical upward-sloping straight line, and the...

In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3. The government is able to raise $750 per month in revenue from the tax. The deadweight loss from the tax is

a.

$250.

b.

$125.

c.

$75.

d.

$50.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In the market for pineapple. the demand curve is downward sloping and the supply curve is...
In the market for pineapple. the demand curve is downward sloping and the supply curve is horizontal. The market is currently at equilibrium. If a per unit tax is imposed on pineapple, the burden of the tax is heavier for consumers. True False
Which of the following statements is correct for a market with an upward-sloping supply curve and...
Which of the following statements is correct for a market with an upward-sloping supply curve and a downward-sloping demand curve? If the supply curve shifts left and demand remains constant, equilibrium quantity will rise. If the supply curve shifts right and the demand curve remains constant, equilibrium price will rise. If the demand curve shifts left and the supply curve shifts right, equilibrium price will rise. If the demand curve shifts right and the supply curve shifts left, equilibrium price...
Suppose that the market for flu shots has downward sloping demand and upward sloping supply and...
Suppose that the market for flu shots has downward sloping demand and upward sloping supply and that flu shots yield a positive consumption externality of $5 per shot. Show graphically how the private optimum may differ from the social optimum and indicate the deadweight loss. Additionally, show graphically how a subsidy for flu shots can achieve the social optimum.
Consider the case of an upward sloping supply curve. Show on a graph: a. The market...
Consider the case of an upward sloping supply curve. Show on a graph: a. The market equilibrium wage rate and labor supply before the imposition of income tax.
5. Given a typical upward slopping labor supply curve in a particular labor market of insurance...
5. Given a typical upward slopping labor supply curve in a particular labor market of insurance agents. How would the supply curve change if: Insurance company is facing an increase in the demand of insurance. 6. Given a typical upward slopping labor supply curve, and a downward slopping labor demand curve in a particular labor market of insurance agents. How would the equilibrium wage change if the insurance company is facing an increase in the demand of insurance. 2 7....
Suppose a commodity tax is levied on a product. The supply curve is linear and upward...
Suppose a commodity tax is levied on a product. The supply curve is linear and upward sloping and the demand curve is linear and downward sloping. The tax lowers the consumer surplus by $300 and lowers the producer surplus by $200. The deadweight loss is $50. The government tax revenue is $[Answer]. Now, suppose we learned that the tax rate is $10 per unit. The equilibrium quantity after the tax must be [Answer]. Consequently, we conclude that the equilibrium quantity...
A straight-line downward-sloping demand curve has a price elasticity of demand that decreases as price decreases...
A straight-line downward-sloping demand curve has a price elasticity of demand that decreases as price decreases increases as price decreases is zero at all prices is unitary at all prices
Let the market demand curve be QD=8-P and the market supply curve be QS=P. Let price...
Let the market demand curve be QD=8-P and the market supply curve be QS=P. Let price P be measured in $/unit and let quantity Q be measured in singular units (i.e. simple count). Solve for the equilibrium price P* and quantity Q*. Now, assume the government imposes a $2/unit tax on consumers, which leads to wedge/gap between the buyers’ price Pb and the sellers’ price PS. Rewrite the demand and supply curves using Pb and PS, respectively. Write down the...
Suppose demand and supply can be characterized by the following equations: Qd = 6 – 2P...
Suppose demand and supply can be characterized by the following equations: Qd = 6 – 2P Qs = P Price is in dollars; quantity is in widgets. For parts (a) and (b), assume there is no tax. Show your work for each step below. Find the equilibrium price and quantity algebraically. Calculate the following: consumer surplus producer surplus total firm revenue production costs For parts (c) and (d), assume a tax of $1.50 per widget sold is imposed on sellers....
1. Why is the typical demand curve downward sloping? 2. Amy goes to the movies several...
1. Why is the typical demand curve downward sloping? 2. Amy goes to the movies several times a month. Currently the price of a movie ticket is $12 and she goes 3 times a month. Sometimes, the theater runs a promotion and the ticket price drops to $8. When this happens, Amy attends the movies 4 times a month. However, there are rumors that the movie theater is going to increase their prices to $15. If this happens, Amy will...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT