1. In the field of economics, supply and demand are the two basic and important terms to be fully understood. In terms of economics, the forces of supply and demand determine our everyday lives as they set the prices of the goods and services we buy daily. Although, law of supply and demand are introduced separately, it's the combination of the two concepts that determine how much of a good and services is to be produced and consumed in an economy and at what price. These issue can be solve through the concept of equilibrium price and quantity in a market. Suppose the quantity demanded of Good Z (Qz demanD) depends upon its price (Pz), monthly income (Y), and the price of a related Good W (Pw). The demand for Good Z (Qz) is expressed by the equation= Qz demand = 150 – 8Pz + 2Y – 15PW. The monthly income (Y) is equal to 60 pesos and the price related to Good W (Pw) is equal to 12 pesos. On the other hand, the supply for Good Z (Qz supply) is expressed as Qz suppLy = -20 + 2Pz. In general, the condition for equilibrium in a market is that the quantity supplied is equal to the quantity demanded. This equilibrium identity determines the market price P, since quantity supplied and quantity demanded are both functions of price. However, most states impose sales tax on some goods and services as a means of generating revenue. In this event, sales taxes also influence consumer behavior. Now, for instance, suppliers must pay a tax of 6 pesos per unit of Good Z. Determine the following requirements: a. How much should the consumers pay for any Good Z considering tax in pesos? b. Due to tax, the quantity diminished by how much in units? c. How much is the tax revenue for Good Z in pesos? d. What is the equilibrium price without tax in pesos?
1. In the field of economics, supply and demand are the two basic and important terms to be fully understood. In terms of economics, the forces of supply and demand determine our everyday lives as they set the prices of the goods and services we buy daily. Although, law of supply and demand are introduced separately, it's the combination of the two concepts that determine how much of a good and services is to be produced and consumed in an economy and at what price. These issue can be solve through the concept of equilibrium price and quantity in a market. Suppose the quantity demanded of Good Z (Qz demanD) depends upon its price (Pz), monthly income (Y), and the price of a related Good W (Pw). The demand for Good Z (Qz) is expressed by the equation= Qz demand = 150 – 8Pz + 2Y – 15PW. The monthly income (Y) is equal to 60 pesos and the price related to Good W (Pw) is equal to 12 pesos. On the other hand, the supply for Good Z (Qz supply) is expressed as Qz suppLy = -20 + 2Pz. In general, the condition for equilibrium in a market is that the quantity supplied is equal to the quantity demanded. This equilibrium identity determines the market price P, since quantity supplied and quantity demanded are both functions of price. However, most states impose sales tax on some goods and services as a means of generating revenue. In this event, sales taxes also influence consumer behavior. Now, for instance, suppliers must pay a tax of 6 pesos per unit of Good Z. Determine the following requirements: a. How much should the consumers pay for any Good Z considering tax in pesos? b. Due to tax, the quantity diminished by how much in units? c. How much is the tax revenue for Good Z in pesos? d. What is the equilibrium price without tax in pesos?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:1. In the field of economics, supply and demand are the two basic and important terms to be
fully understood. In terms of economics, the forces of supply and demand determine our
everyday lives as they set the prices of the goods and services we buy daily. Although, law of
supply and demand are introduced separately, it's the combination of the two concepts that
determine how much of a good and services is to be produced and consumed in an economy
and at what price. These issue can be solve through the concept of equilibrium price and
quantity in a market. Suppose the quantity demanded of Good Z (Qz demanD) depends upon its
price (Pz), monthly income (Y), and the price of a related Good W (Pw). The demand for Good
Z (Qz) is expressed by the equation= Qz demand = 150 – 8Pz + 2Y – 15PW. The monthly
income (Y) is equal to 60 pesos and the price related to Good W (Pw) is equal to 12 pesos. On
the other hand, the supply for Good Z (Qz supPLy) is expressed as Qz SUPPLY = -20 + 2Pz. In
general, the condition for equilibrium in a market is that the quantity supplied is equal to the
quantity demanded. This equilibrium identity determines the market price P, since quantity
supplied and quantity demanded are both functions of price. However, most states impose sales
tax on some goods and services as a means of generating revenue. In this event, sales taxes also
influence consumer behavior. Now, for instance, suppliers must pay a tax of 6 pesos per unit of
Good Z. Determine the following requirements:
a. How much should the consumers pay for any Good Z considering tax in pesos?
b. Due to tax, the quantity diminished by how much in units?
c. How much is the tax revenue for Good Z in pesos?
d. What is the equilibrium price without tax in pesos?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education