Question

A.1. a. Suppose the demand function P = 10 - Q, and the supply function is:...

A.1. a. Suppose the demand function P = 10 - Q, and the supply function is: P = Q, where P is price and Q is quantity. Calculate the equilibrium price and quantity.

b. Suppose government imposes per unit tax of $2 on consumers. The new demand function becomes: P = 8 – Q, while the supply function remains: P = Q.

Calculate the new equilibrium price and quantity. c. Based on (b), calculate the consumer surplus, producer surplus, tax revenue, total surplus and deadweight loss under the tax rate in (b). Also explain your answers in (c) diagrammatically.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that the demand equation: P = 6 – Q and supply equation: P = Q....
Suppose that the demand equation: P = 6 – Q and supply equation: P = Q. a. Calculate the price elasticity of demand at equilibrium. b. Calculate the equilibrium price and quantity, and consumer surplus and producer surplus. c. Suppose government imposes a unit tax of $1 on producers. Derive the new supply curve and also calculate the new equilibrium price and quantity. d. Calculate tax revenue and the deadweight loss of this tax.
Using the following information to calculate a)-n). Demand: P = 45- ½ Q Supply: P =...
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...
Suppose that demand for chicken cesar salad can be expressed by (the normal) demand function: Q=10-P....
Suppose that demand for chicken cesar salad can be expressed by (the normal) demand function: Q=10-P. Further Suppose that the (normal) supply function can be expressed: Q=2P-2. Graph the Situation. 1. What is the initial equilibrium price? 2. What is the initial equilibrium quantity? 3. Suppose that a tax of $3/salad is levied on the producer. What will be the new price paid by consumers after the tax? 4. What will be the new price received by the producer after...
Suppose the market demand for a commodity is given by the download sloping linear demand function:...
Suppose the market demand for a commodity is given by the download sloping linear demand function: P(Q) = 3000 - 6Q where P is a price and Q is quantity. Furthermore, suppose the market supply curve is given by the equation: P(Q) = 4Q a) Calculate the equilibrium price, quantity, consumer surplus and producer surplus. b) Given the equilibrium price calculated above (say's P*), suppose the government imposes a price floor given by P' > P*. Pick any such P'...
The demand for skateboards in Vermillion is Q = 500−2P and the supply curve is Q...
The demand for skateboards in Vermillion is Q = 500−2P and the supply curve is Q = 1/2 P. The government 2 decides to raise revenue by taxing consumers $25 for each skateboard purchased. (a) Graph the supply and demand curves and calculate the consumer and producer surplus that would exist if there were no tax in the market. (b) Show how the tax will change the market equilibrium price and quantity. Identify the price paid by consumers and the...
The market for apples is perfectly competitive, with the market supply curve is given by P...
The market for apples is perfectly competitive, with the market supply curve is given by P = 1/8Q and the market demand curve is given by P = 40 – 1/2Q. a. Find the equilibrium price and quantity, and calculate the resulting consumer surplus and producer surplus. Indicate the consumer surplus and producer surplus on the demand and supply diagram. b. Suppose the government imposes a 10 dollars of sale tax on the consumer. What will the new market price...
Suppose that the demand curve for wheat is Q=100−10p and the supply curve is Q=10p. The...
Suppose that the demand curve for wheat is Q=100−10p and the supply curve is Q=10p. The government imposes a price ceiling of p=3 i) Describe how the equilibrium changes. ii) What effect does this price ceiling have on consumer surplus, producer surplus, and deadweight loss?
Suppose the demand curve for a good is Q =9 −pand the supply curve is Q...
Suppose the demand curve for a good is Q =9 −pand the supply curve is Q =2p. The government imposes a specific tax of =1 per unit. What would be the equilibrium? What effect does the tax have on consumer surplus, producer surplus and deadweight loss?
Suppose that the demand curve for wheat is D(p) = 120 − 10p and the supply...
Suppose that the demand curve for wheat is D(p) = 120 − 10p and the supply curve is S(p) = 2p. Compute the consumer and producer surplus at the equilibrium. Indicate them on a clearly marked graph. Assume that the government imposes a specific tax of $2.4 on wheat, to be paid by the consumers. Compute the government revenue and the deadweight loss generated by this tax.
Consider a perfectly competitive market with Market demand function: ?? = 1000 − 2? Market supply...
Consider a perfectly competitive market with Market demand function: ?? = 1000 − 2? Market supply function: ?? = 2? a. Suppose there is no sales tax. What is the equilibrium price and equilibrium quantity? What is the consumer surplus and producer surplus? b. Now suppose the government imposes a sales tax of $50 per unit on consumers. What is the new equilibrium price and equilibrium quantity? What is the new consumer surplus and producer surplus? What is the tax...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT