Question

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 revenue after the implementation of the $5 tax. Make sure to show your work.

Answer #1

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....

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...

If demand in the cake market is Qd= 600 - 10p, and unrestricted
supply is Qs = 200 + 10p, what is the effect on price, quantity,
producer, and consumer surplus of a baker’s license that reduces
cake supply to Q's= 10p?

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,...

Assume that the demand for a commodity is represented by the
equation Qd = 300-50P and supply by the equation Qs= -100+150P
where Qd and Qs are quantity demanded and quantity supplied,
respectively, and P is price. Using equilibrium condition Qd = Qs,
solve the equation to determine equilibrium price and quantity.

Suppose the domestic demand for television sets is given by the
following demand equation: Qd = 2400- 10P, where P is the price of
television sets in dollars. The domestic supply of television sets
is: Qs =2P. Finally assume that television sets can be imported at
the world price of $160. Suppose the government bans the import of
television sets. How much would domestic consumer surplus and
domestic producer surplus change as a result of this policy and
what would...

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...

Suppose the market for soda is represented by the following
supply and demand equations:
QS = 35P – 39.75 and
QD = 10.25 – 5P, where P is
price per bottle and Q measures bottles per second.
a. What are the value of consumer and producer surplus?
b. If the government imposes a $0.50 tax per bottle, what are
the value of consumer and producer surplus?
c. What is the deadweight loss from the tax? How much revenue
does the...

1. Suppose the demand for village defense in Temeria is
Qd=300-2P, and the supply is Qs=4P.
a. Graph the supply and demand curves. (3 points)
b. Solve for the equilibrium price and quantity. Show this point
on your graph from part (a). (5 points)
c. How much consumer surplus is created in this market? How much
producer surplus? (4 points)
d. Suppose the King of Temeria puts a tax of 10 orens per unit
on village defense. Write an equation...

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,...

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