Question

1 and 2 examine the market for Rmags. The demand for Rmags is given by Q...

1 and 2 examine the market for Rmags. The demand for Rmags is given by Q = 12,500–500P and the supply by Q =-2500 + 250P.

2) Suppose that a $1.20 per unit tax is placed on the Rmag producers.

a.What is the new equilibrium price and quantity?

b.What do buyers pay per unit? What is the total consumer expenditure?

c. What do sellers get per unit? What is the total seller revenue?

d.How much tax revenue iscollected?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a) Price paid by consumer = P + Tax amount =p+1.20

quantity demanded= 12500 - 500(p+1.20)= 11900 -500p. Now at equilibrium quantity demanded= quantity supplied,11900 - 500p= -2500+250p = 14400= 750p= 19.2=p(price of the seller). For consumer price is 19.2+1.20=$ 20.4 and quantity is 2300

b) price paid by consumer is 19.2+ 1.20=$ 20.4. Total consumer expenditure= 20.4* 2300= $46920

c) price recieved by sellers = $19.2. Total sellers revenue is 19.2* 2300= $44160

d)Tax revenue is collected= $2760

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1). The market demand function for a good is given by Q = D(p) = 800...
1). The market demand function for a good is given by Q = D(p) = 800 − 50p. For each firm that produces the good the total cost function is TC(Q) = 4Q+( Q2/2) . Recall that this means that the marginal cost is MC(Q) = 4 + Q. Assume that firms are price takers. (a) What is the efficient scale of production and the minimum of average cost for each firm? Hint: Graph the average cost curve first. (b)...
Assume that supply and demand are given by the equations: QS = 500P QD = 3600...
Assume that supply and demand are given by the equations: QS = 500P QD = 3600 – 1000P A $0.60 per unit tax imposed on sellers in this market. Sketch a graph showing values for equilibrium price and quantity before the tax, the effect of the tax on supply, and the effect of the tax on the price paid by consumers, the price retained by sellers, and the quantity bought and sold. Show all of these values in your graph....
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...
Consider a market for cell phones. The demand and supply are defined by P = 400...
Consider a market for cell phones. The demand and supply are defined by P = 400 -10 q, and P = 100 + 2q Suppose now that the government requires each seller to pay a 60 tax for each cell phone. Compute the change in consumer surplus, change in producer surplus, the tax revenue, and the deadweight loss in the new equilibrium. Suppose now that the government does not tax the seller, but instead the buyer to pay a $60...
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....
Suppose that the demand equation: P = 6 – Q and supply equation: P = Q....
Suppose that the demand equation: P = 6 – Q and supply equation: P = Q. a. Calculate the price elasticity of demand at equilibrium. b. Calculate the equilibrium price and quantity, and consumer surplus and producer surplus. c. Suppose government imposes a unit tax of $1 on producers. Derive the new supply curve and also calculate the new equilibrium price and quantity. d. Calculate tax revenue and the deadweight loss of this tax.
Using the following information to calculate a)-n). Demand: P = 45- ½ Q Supply: P =...
Using the following information to calculate a)-n). Demand: P = 45- ½ Q Supply: P = 2Q a) P*=_________ b) Q*=_________ c) Initial Consumer Surplus=__________ d) Initial Producer Surplus=__________ e) Total Surplus =_________________ Now the government imposes a $15 per unit tax on consumers. Calculate the following. f) Tax Distorted Competitive Equilibrium Quantity=_____ g) Price (consumers pay with tax)=________ h) Price (producers get with tax)=________ i) Consumer surplus with tax=_________ j) Producer surplus after tax=__________ k) Tax Revenue=_____________ l) Total...
1. Market demand and supply for a commodity are given by the following equations: Demand: X...
1. Market demand and supply for a commodity are given by the following equations: Demand: X = 30 – (1/3) P Supply: X = -2.5 + (1/2) P where X= quantity (units), and P=price per unit ($) Suppose that the government is planning to impose a tax on this commodity and considering the following two options: Option 1: A unit tax of $15 Option 2: An ad valorem tax of 20% a) Find the tax incidence on buyers and producers,...
Suppose that a market is described by the following supply and demand equations: QS = 2P...
Suppose that a market is described by the following supply and demand equations: QS = 2P QD = 400 - 3P Solve for the equilibrium price and the equilibrium quantity. Suppose that a tax of T is placed on buyers, so the new demand equation is QD = 400 – 3(P+T) Solve for the new equilibrium. What happens to the price received by sellers, the price paid by buyers, and the quantity sold? Tax revenue is T x Q. Use...
Part I. Partial Equilibrium Tax Incidence under Competition Suppose the market for cau-hot-dogs is characterized by...
Part I. Partial Equilibrium Tax Incidence under Competition Suppose the market for cau-hot-dogs is characterized by the following daily demand and supply curves. Drawing a diagram of the curves will help you find the right answers. Demand curve: P = 1300 - Q Supply curve: P = 180 + 9Q 1. What is the market equilibrium quantity of a cau-hot-dog? 2. What is the market equilibrium price of a cau-hot-dog? Suppose the government requires the seller to pay 10% of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT