Question

Qd= 20-2P and Qs= 3P.

a) Draw the demand and supply curves.

b)What is the equilibrium point.

c) Computer initial Consumer Surplus, CS0. Show work.

d) Computer initial Producer Surplus, PS0. Show work.

e) Computer initial Total Surplus. TS0. Show work.

f) Supposed a $5 tax, T=5, has been levied on consumers. (i) Compute the new demand curve (ii) Draw the new demand curve in (a).

g) Compute the DWL of the consumer and the producer after tax.

h) Compute the tax revenue generated by the $5 tax.

i) Compute the producer surplus, CS1, after the $5 tax has been enforced.

j) Compute the producer surplus, PS1, after the $5 tax has been enforced.

Answer #1

Setting QD=QS

20-2P=3P

20=3P+2P

P=20/5 = 4

Q=20-2(4) = 12

a) Find Y axis intercepts

When QD=0,P=20/2 =10

When QS=0,P =0/3 =0

b) Equilibrium point is denoted by letter E

c) Initial CS = 0.5*12*(10-4) = 36

d) Initial PS = 0.5*12*(4-0) = 24

e) TS = CS+PS = 36+24 = 60

f) A tax on consumers will shift the demand curve to the left by $5 at each price level.

as shown by the new demand curve D2

g) DWL of consumer = 0.5*(12-5)*(7-4) = 10.5

DWL of the producer = 0.5*(12-5)*(4-2) = 7

Total DWL = 17.5

h) Tax revenue = 5*5 = 25

i) CS after the tax = 0.5*5*(10-7) = 7.5

j) PS after the tax = 0.5*5*(2-0) = 5

25) Recall the demand and supply equations: QD=20 -
2P and QS=3P.
(a) Suppose a $5 tax, T=5, has been levied on consumers: (i)
Compute the new demand curve (ii) Draw the new demand curve in
(a)
(b) Compute the DWL of the consumer and the producer after the
tax.
(c) Compute the tax revenue generated by the $5 tax.
(d) Compute the consumer surplus, CS1, after the $5
tax has been enforced.
(e) Compute the producer surplus, PS1, after...

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 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....

Suppose the demand function for corn is Qd = 10 – 2p, and supply
function is Qs = 3p
– 5. The government is concerned that the market equilibrium
price of corn is too
low and would like to implement a price support policy to
protect the farmers. By
implementing the price support policy, the government sets a
support price and
purchases the extra supply at the support price. In this case,
the government sets the
support price p =...

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...

Consider the national market for electric school buses with the
demand given by Qd=600-2P and supply given by Qs=3P-150. (Note:
the price is in thousands of US$ and quantity is in
thousands of buses).
(10pts) Calculate the Total Surplus at the equilibrium point
and provide a succinct argument as to why the equilibrium
represents an efficient allocation of resources in this
market.
(10pts) Consider now that the price of electric school buses
increases by $60 (thousands) above the equilibrium
price...

1. The market demand and supply was given as follow: Qd = 10 –
2P Qs = -5 + 3P
a) Compute for the Price equilibrium
b) Compute for the Quantity equilibrium
c) Plot/graph the following equation.
2. Given the equation, find the equilibrium price and quantity
of the following market and plot the equation. 13P – Qs = 27 Qd +
4P – 24 = 0

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.

Consider the following supply and demand functions
qD = 12-3p
qS = -3 + 2p
a) Plot the supply and demand functions.
b) What are the equilibrium price and quantity?
c) At the equilibrium price and quantity, what is the price
elasticity of demand?
d) Interpret the price elasticity of demand. How much will
quantity change if the price increases by 1%?
e) Suppose I were to calculate an income elasticity of e = 0.5
What does this imply about...

the following demand and supply curves:
QD = 80,000 - 2,000P and QS = -25,000 + 5,000P
3.
What is the consumer surplus in this example of supply and
demand?
What is the producer surplus in this example?
How much are the variable costs to the firm in this example?
4.
Suppose the government were to impose a price ceiling of $10 on
the sale of
each unit sold in this market.
Is there a shortage or a surplus? By...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 13 minutes ago

asked 26 minutes ago

asked 26 minutes ago

asked 30 minutes ago

asked 32 minutes ago

asked 32 minutes ago

asked 48 minutes ago

asked 48 minutes ago

asked 48 minutes ago

asked 56 minutes ago

asked 1 hour ago

asked 1 hour ago