Question

Consider the following general demand and supply functions for a given commodity. Qd=a-bp Qd=-c+dp a. Find...

Consider the following general demand and supply functions for a given commodity.

Qd=a-bp

Qd=-c+dp

a. Find the equilibrium price and quantity [4 Marks]

b. Suppose that a fixed tax t is imposed on the product in question, what is the new equilibrium price and quantity. [6 Marks]

d. Express the value of t in terms of a, b, c, d, and p. [3 Marks]

e. Use iii. Above to write the expression for government revenue. [2 Marks]

f. Suppose that instead of a fixed tax, the government decides to set a non-binding price floor equal to λ. How many units will be supplied and how many units will be demanded to ensure optimal quantities? [5 Marks]

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
Suppose demand and supply are given by Qd = 60 - P and Qs  = 1.0P -...
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 that the market demand and supply for milk is given by Qd =120−6P and Qs...
Suppose that the market demand and supply for milk is given by Qd =120−6P and Qs = 12P − 60 a. Find the market equilibrium quantity, and the equilibrium price. (5 points) b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus (or shortage) if a price floor of $11 is imposed in this market. (5 points) c. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus (or shortage) if a price...
Suppose the corn market has the following equations: QD = 3000 - 400P QS = 900...
Suppose the corn market has the following equations: QD = 3000 - 400P QS = 900 + 300P Where QD and QS are quantity demanded and quantity supplied measured in bushels, and P = price per bushel. Determine consumer surplus at the equilibrium price and quantity. 6 marks Assume that the government has imposed a price floor at $3.50 per bushel and agrees to buy any resulting excess supply. How many bushels of corns will the government be forced to...
The demand and supply functions of a given competitive market are provided as follows: Qd =...
The demand and supply functions of a given competitive market are provided as follows: Qd = 100 – 2P Qs = 70 + 3P You are required to; (a) Find the equilibrium price and quantity sold. 7 marks (b) Assuming that the government of Ghana has imposed GH¢2.00 per unit tax on the good in the market. What will be the new equilibrium price and quantity in the market? 11 marks
Suppose demand and supply are given by Qd = 60 – P and Qs = P...
Suppose demand and supply are given by Qd = 60 – P and Qs = P -20 What are the equilibrium quantity and price in this market? Determine the quantity demanded, the quantity suppled, and the magnitude of the surplus if a price floor of $50 is imposed in this market. Determine the quantity demanded, the quantity suppled, and the magnitude of the shortage if a price celling of $32 is imposed in this market. Also determine the full economic...
A market is described by the following supply and demand curves: QSQS =  = 3P3P QDQD =  =...
A market is described by the following supply and demand curves: QSQS =  = 3P3P QDQD =  = 400−P400−P The equilibrium price is______ and the equilibrium quantity is_______ . Suppose the government imposes a price ceiling of $80. This price ceiling is (binding or not binding) , and the market price will be . The quantity supplied will be______ , and the quantity demanded will be_____ . Therefore, a price ceiling of $80 will result in (a shortage, neither a shortage nor...
A market is described by the following supply and demand curves: QS = 2P QD =...
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 that the demand curve for a particular commodity is P=17-2D, where D is the quantity...
Suppose that the demand curve for a particular commodity is P=17-2D, where D is the quantity demanded and P is the price. The supply curve for the commodity is P=2+S, where S is quantity supplied. (1)Find the equilibrium price and output. Suppose now that a unit tax of 3 dollars is imposed on the commodity. (2) Show the new equilibrium is the same regardless of whether the tax is imposed on producers or buyers of the commodity. (3) Calculate the...
Assume the market can be described by the following supply and demand curves. Qs=2p Qd=300-p A....
Assume the market can be described by the following supply and demand curves. Qs=2p Qd=300-p A. Solve for the equilibrium price and equilibrium quantity. Sketch this market. B. Solve for the consumer surplus and producer surplus in this market. C. If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and the size of the shortage or surplus (if one exists and the answers differ...
Consider the following market for a crop: Demand: QD = a - bP = 18 -...
Consider the following market for a crop: Demand: QD = a - bP = 18 - 0.5P Supply: QS = c+dP = -2 + 0.5P [Insert an image of your graph here] 1. What is the equilibrium price and quantity? 2. What is the elasticity of demand at the equilibrium? What is the elasticity of supply at the equilibrium? 3. What is the total revenue (price times quantity) of suppliers at the equilibrium? 4. Suppose that the crop is larger...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT