Question

Using the following information to calculate a)-n). Demand: P = 45- ½ Q Supply: P = 2Q

a) P*=_________

b) Q*=_________

c) Initial Consumer Surplus=__________

d) Initial Producer Surplus=__________

e) Total Surplus =_________________

Now the government imposes a $15 per unit tax on consumers. Calculate the following.

f) Tax Distorted Competitive Equilibrium Quantity=_____

g) Price (consumers pay with tax)=________

h) Price (producers get with tax)=________

i) Consumer surplus with tax=_________

j) Producer surplus after tax=__________

k) Tax Revenue=_____________

l) Total Surplus after tax=_____________

m) Deadweight Loss=____________

n) What parts above would change if it was a $15 tax on producers?__________________

Answer 1