Question

Qd = 240 - 5P

Qs = P

(a) Where Qd is the quantity demanded, Qs is the quantity supplied and P is the Price. Find:

(1) the Equilibrium Price before the tax

(2) the Equilibrium quantity before the tax

(3) buyers reservation price

(4) sellers reservation price

(5) consumer's surplus before tax

(6) producer's surplus before tax

(b) Suppose that the government decides to impose a tax of $12 per unit on seller's in the market.

Determine:

(1) Demand & Supply equation after tax

(2) buyer's price after tax

(3) seller's price after tax

(4) quantity after tax

(5) consumer surplus after tax

(6) producer surplus after tax

(7) tax revenue

(8) deadweight loss of the tax

(9) total surplus after tax

Answer #1

a) Set D=S

1) 240-5P = P

P = 240/6 = 40

2) Q = 240-5*40 = 40

3) Buyers reservation price when QD = 0,

P = 240/5 = 48

4) Sellers reservation price when QS =0,

P = 0

5) CS = 0.5*40*(48-40) = 160

6) PS = 0.5*40*(40-0) = 800

b) With the tax,

1) the supply curve is QS = P+12

2) Set D=S

240-5P = P-12

240+12 = P+5P

P = 252/6 = 42

Q = 42-12 = 30

Buyers price = 42

3) Sellers price = 42-12 = 30

4) Q = 30

5) CS after tax = 0.5*30*(48-42) = 90

6) PS after tax = 0.5*30*(30-0) = 450

7) Tax revenue = 12*30 = 360

8) DWL = 0.5*(40-30)*12 = 60

9) TS = CS+PS+Revenue = 90+450+360 = 900

Suppose that the (inverse) demand for Sugar in the US is given
by, P= 75-2 Qd
where P = price per bulk bag (in dollars) and Qd =
quantity demanded (in millions of bulk bags).
Suppose the (inverse) supply of sugar is given by, P= 3
Qs
where P = price per bulk bag (in dollars) and Qs =
quantity supplied (in millions of bulk bags).
a.) Find the equilibrium price and quantity of sugar exchanged
in the US market,...

Suppose the demand curve is given by Qd=75-5P and the supply
curve is given by Qs=P-3. SHOW YOUR WORK in the space below (type
it out, line by line), and solve for the equilibrium price, the
equilibrium quantity, the consumer surplus, the producer surplus,
and the total surplus.

Suppose the market for grass seed can be expressed as: Demand:
QD = 200 - 5p
Supply: QS = 40 + 5p
3.1 Calculate the price and quantity in equilibrium
3.2 If the government collects a $5 specific tax from sellers,
how much will the quantity
demanded change from the amount demanded before the tax? What
price will consumers pay after the tax? What price will sellers
receive after the tax? What is the tax revenue?
3.3 Draw the graph...

Given the demand and supply for water dispensers:
Qd = 720 - 17 P
Qs = -70 + 20 P
1. The market equilibrium price is
2. The market equilibrium quantity is
3. What is the value of the demand curve's vertical intercept
?
4. What is the value of the supply curve's vertical
intercept?
5. What is the Consumer's Surplus?
6. What is the Producer's Surplus?
Submit Assignment

6. Suppose the demand equation can be represented as QD = 1200 –
10p and the Supply equation by Qs= 10p.
a. Solve for the equilibrium price and quantity.
b. Say an excise tax of $5 was placed on the buyers. Solve for
the price buyers pay, price that sellers receive, and the quantity
sold in the market after the tax. Show your work and results
graphically.
c. Find the deadweight loss, consumer surplus, producer surplus,
consumer surplus, and tax...

Suppose demand and supply are given by Qd =
60 - P and Qs = 1.0P
- 20.
a. What are the equilibrium quantity and price in this
market?
Equilibrium quantity:
Equilibrium price: $
b. Determine the quantity demanded, the quantity supplied, and the
magnitude of the surplus if a price floor of $52 is imposed in this
market.
Quantity demanded:
Quantity supplied:
Surplus:
c. Determine the quantity demanded, the quantity supplied, and the
magnitude of the shortage if a price...

Suppose there is a market at its competitive equilibrium.
Demand p = 100 - QD
Supply p = 20 + (QS /3) The government introduces a subsidy of s
= $4 per unit of the good sold and bought.
(a) Draw the graph for the demand and supply before subsidy.
(b) What is the equilibrium price and quantity before the
subsidy and after the subsidy?
(c) Looking at the prices buyers pay and sellers receive after
the subsidy compared to...

A market is described by the following supply and demand
curves:
QS = 2P
QD = 400 - 3P
Solve for the equilibrium price and quantity.
If the government imposes a price ceiling of $70, does a
shortage or surplus (or neither) develop? What are the price,
quantity supplied, quantity demanded, and size of the shortage or
surplus?
If the government imposes a price floor of $70, does a shortage
or surplus (or neither) develop? What are the price, quantity...

Suppose the market demand curve for a product is given by
QD=100-5P and the market supply curve is given by
QS=5P
a. What are the equilibrium price and quantity?
b. At the market equilibrium, what is the price elasticity of
demand?
Suppose government sets the price at $15 to benefit the
producers.
What is the quantity demanded?
What is the quantity supplied?
What is the amount of the surplus?
Suppose market demand increases to Qd=200-5P.
What is the new equilibrium...

Suppose a market is characterized by the following supply and
demand equations:
QD=1,000-5P
QS=-500+10P
1.)Determine equilibrium price and quantity.
2.)Suppose that the government taxes production such that for every
unit produced, sellers must pay the government $10. Determine the
new equilibrium price(s) and quantity.
3.)Suppose that instead of taxes, the government imposes a price
floor such that the minimum amount the good can be sold for is
$150. Determine the new equilibrium price and quantity.
4.)Determine producer surplus, consumer surplus,...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 23 minutes ago

asked 24 minutes ago

asked 32 minutes ago

asked 39 minutes ago

asked 42 minutes ago

asked 44 minutes ago

asked 51 minutes ago

asked 58 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago