Question

economics

There is a concern that carbon emissions that are a byproduct of the burning of coal and other fuels contributes to global warming. One proposed solution is to tax the use of these fuels based on their carbon content. The following table gives information on the demand and supply of coal: Price ($/ton) 400 350 300 250 200 Quantity demanded 10 12 14 16 18 Quantity supplied 18 16 14 12 10 What will be the free-market price and quantity, and what will be the price and quantity if the government requires suppliers to pay a $100 tax for each ton of coal produced?

Answer 1

Do rate the anw=swer if you find it satisfactory

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Given information:

Price ($/ton)	Quantity demanded	Quantity supplied
400	10	18
350	12	16
300	14	14
250	16	12
200	18	10

Equlibrium ocuurs when quanity demanded is equal to quantity supplied so free market equilibrium occurs at price $300/ton and equilibrium quanitity is 14 tons.

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If government requires suppliers to pay a tax of $100 per ton then the supply curve shift to the left by this amount, so amount supplied at $100 previously will now be supplied at $200.

Price ($/ton)	Quantity supplied after tax of $100/unit	Quantity demanded
500	18	6
450	16	8
400	14	10
350	12	12
300	10	14
250	8	16
200	6	18

After tax equilibrium occurs where quantity demanded is equal to quantity supplied, Equlibrium price after tax = $350/ton and equlibrium quantity is 12 tons