Question

Consider the national market for electric school buses with the demand given by Qd=600-2P and supply...

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).

  1. (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.
  1. (10pts) Consider now that the price of electric school buses increases by $60 (thousands) above the equilibrium price due to a tax on e-waste containing products. Will there be any efficiency losses (i.e. decrease in Total Surplus)? Calculate the new Total Surplus and find the Deadweight Loss due to this tax.
  1. (10pts) Compute the Leakage that occurs after the tax in c is implemented (hint: use the DWL only from the consumer side). What is the significance of this number? Why is it important from a tax policy perspective?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the following market. Demand is given by qd = 150 – 2P, where qd is...
Consider the following market. Demand is given by qd = 150 – 2P, where qd is the quantity demanded and P is the price. Supply is given by qs = P, where qs is the quantity supplied.The government implements a tax of $30 per unit to be paid by consumers. What is the new market equilibrium? What is the economic incidence of the tax (that is, who pays for the tax)? How would your answer change if the government implemented...
1. The market demand and supply was given as follow: Qd = 10 – 2P Qs...
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
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...
Part A. Consider the market for apples where the market demand is given by QD =...
Part A. Consider the market for apples where the market demand is given by QD = 30 − 2p and market supply is given by QS = P Find the market equilibrium. What will be the quantity traded if an excise tax of $2/unit is imposed? Calculate the deadweight loss of the excise tax. Part B. Consider the same market from question #1. Consider that you are the only seller in that market and you produce apple for a marginal...
Consider a market for beer with a demand curve which is: Qd = 25 - 2p...
Consider a market for beer with a demand curve which is: Qd = 25 - 2p and a supply curve which is: Qs = 3P a) Find the equilibrium price and quantity. Suppose that the government decided they wished to levy a $2 tax on suppliers. b) Find the new price paid by the consumer and the price received by the seller. c) Based on the tax sharing burden by both the consumer and the seller, comment on the relative...
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
Consider the market for butter in Saudi Arabia. The demand and supply relations are given as...
Consider the market for butter in Saudi Arabia. The demand and supply relations are given as follows: Demand:             QD = 12 - 2P Supply:                Qs = 3P - 3. P is the price of butter. Calculate: Equilibrium price _____________                   2. Equilibrium quantity _____________ Consumer surplus ___________                       4. Producer surplus ___________ Draw the demand and supply graphs. Show the equilibrium price and quantity, consumer surplus and producer surplus in the graph below. Graphs must be on scale. Suppose government imposes...
(10 marks) The market demand and supply functions for milk are: QD = 14 − 2P...
The market demand and supply functions for milk are: QD = 14 − 2P and QS = − 1+P. If a price floor of $6 is implemented, calculate the change in producer surplus. How many surplus units of milk are being produced? If the government purchases all the excess units at $6, calculate the milk expenditures by government?
Qd= 20-2P and Qs= 3P. a) Draw the demand and supply curves. b)What is the equilibrium...
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 demand and supply for a good are respectively QD = 16 – 2P + 2I...
The demand and supply for a good are respectively QD = 16 – 2P + 2I and QS = 2P – 4 with QD denoting the quantity demanded, QS the quantity supplied, and P the price for the good. Suppose the consumers’ income is I = 2. 6) Determine the price-elasticity of demand if P = 2. 7) Determine the income-elasticity of demand if P = 2. 8) Determine the price-elasticity of supply if P = 4. 9) Determine consumers’...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT