Question

1. Suppose the demand for a product is given by P = 30 – 2Q. Also, the supply is given by P = 5 + 3Q. If a $5 per-unit excise tax is levied on the buyers of a good, then after the tax sellers will receive _________ for each unit of the good.

a) $4

b) $5

c) $20

d) $22

e) $17

2. Suppose the demand for a product is given by P = 30 – 3Q. Also, the supply is given by P = 10 + Q. If a $4 per-unit excise tax is levied on the buyers of a good, producer surplus is equal to

a) $4

b) None of these

c) $8

d) $16

e) $24

Answer #1

1. e) $17

After tax price paid by buyer will increase to P + tax = P + 5. So,
demand equation becomes:

P + 5 = 30 - 2Q

So, P = 30 - 2Q - 5 = 25 - 2Q

Now, new demand = supply gives,

25 - 2Q = 5 + 3Q

So, 3Q + 2Q = 25 - 5

So, 5Q = 20

So, Q = 20/5 = 4

Now, P = 5 + 3Q = 5 + 3(4) = 5 + 12 = 17

2. c) $8

After tax price paid by buyer will increase to P + tax = P + 4. So,
demand equation becomes:

P + 4 = 30 - 3Q

So, P = 30 - 3Q - 4 = 26 - 3Q

Now, new demand = supply gives,

26 - 3Q = 10 + Q

So, 3Q + Q = 26 - 10

So, 4Q = 16

So, Q = 16/4 = 4

Now, P = 10 + Q = 10 + 4 = 14

Minimum price producer is willing to accept (at Q = 0) = 10 + 0 =
10

Producer surplus = area of triangle = (1/2)*(P-Minimum price)*Q =
(1/2)*(14-10)*4 = (1/2)*4*4 = 8

Suppose the demand for a product is given by P = 60 –2Q. Also,
the supply is given by P = 10 + 3Q. If a $10 per-unit excise tax is
levied on the buyers of a good, after the tax, the total amount of
tax paid by the consumers is

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 world price for a good
is 40 and the domestic demand-and-supply curves are given by the
following equations:
Demand: P = 80 – 2Q
Supply: P = 5 + 3Q
a. How much is
consumed?
b. How much is produced
at home?
c. What are the values
of consumer and producer surplus?
d. If a tariff of 10
percent is imposed, by how much do consumption and
domestic production change?
e. What is the change in
consumer and...

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 and supply functions for a product are P=
2800-8q-1/3q^2 and p = 400+2q, respectively, where p is in dollars
and q is the number of units. Find q that will maximize the tax
revenue

Suppose the weekly demand for a certain good in thousands of
units, is given by the equation P = 35 - Q, and the weekly supply
curve of the good by the equation P = 15 + Q where P is the price
in dollars. Finally, suppose a per-unit tax of $6, to be collected
from sellers is imposed in this market. Complete the following
questions. Note: If necessary round your answers to two decimal
places.
a) Graph the weekly...

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...

Market demand for calculators is P = 300 – 3Q and market supply
is P = 20 + 2Q. A) Calculate market equilibrium price and quantity.
B) How many calculators will be traded if a $10/unit sales tax is
implemented? C) Does it matter if we impose this tax on suppliers
or consumers? Why? D) At market equilibrium, is demand more or less
elastic than supply? E) Calculate the effects of the tax on
consumer surplus, producer surplus, tax revenue,...

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 that a market has the following demand and supply
functions (normal): Qd = 10-P and Qs = 2P-2.
If the government imposed a $3/unit excise tax on producers in
this market, what would be the value of producer surplus?
If the government imposed a $3/unit excise tax on producers in
this market, what would be the value of consumer surplus?
If the government imposed a $3/unit excise tax on producers in
this market, what would be the DWL?
If...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 1 minute ago

asked 20 minutes ago

asked 26 minutes ago

asked 28 minutes ago

asked 29 minutes ago

asked 31 minutes ago

asked 43 minutes ago

asked 45 minutes ago

asked 46 minutes ago

asked 50 minutes ago

asked 54 minutes ago