1. What is the equilibrium price and quantity?2. Suppose the government imposes a tax of $1.00 on each water bottle. Complete the column showing quantitysupplied after the tax. (Hint: at a price of $8.00 the quantity supplied was 36000. With the tax, this quantitysupplied will be supplied only at a price of $9.00, so the Quantity supplied with a tax at 9.00 is 36000) Youcontinue, so at $8.50, the producer only gets 7.50. so is only willing to offer 32000 units.QdPrice 000s)$9.00 208.508.007.507.006.506.00242832364044Qs(000s)44403832282420Quantity suppliedafter tax Qs(t)(000s)3632Price28243. On your graph, plot the new supply curve after the imposition of the tax (in a different colour, to differentiate thesupply curve).4. What will be the new equilibrium price and quantity?5. How much of the tax is passed onto the consumers in the form of price increase, and how much is paid by theproducers? Indicate the producer and consumer burden on your graph. Refer to this example to help you.Burden ancomungabanken per producaçQ1 QD5 + taxQuantyby Economics OnlineYou will note that the supply curve shifts left. Find the new equilibrium price (P1). Draw a straight line down to the x-axis. Where the line meets the original supply curve, draw a line to the y axis. The area beneath the original priceline is the burden on the producer and the area above is the burden on the consumer burden. The level of burden ofa tax on the producer or consumer depends on elasticity of demand.

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1. What is the equilibrium price and quantity? 2. Suppose the government imposes a tax of $1.00 on each water bottle. Complete the column showing quantity supplied after the tax. (Hint: at a price of $8.00 the quantity supplied was 36000. With the tax, this quantity supplied will be supplied only at a price of $9.00, so the Quantity supplied with a tax at 9.00 is 36000) You continue, so at $8.50, the producer only gets 7.50, so is only willing to offer 32000 units. Qd Qs Price 000s) (000s) $9.00 20 8.50 24 8.00 7.50 7.00 6.50 6.00 28 32 36 40 44 44 40 38 32 28 24 20 Quantity supplied after tax Qs(t) (000s) 36 32 28 24 3. On your graph, plot the new supply curve after the imposition of the tax (in a different colour, to differentiate the supply curve).

1. What is the equilibrium price and quantity? 2. Suppose the government imposes a tax of $1.00 on each water bottle. Complete the column showing quantity supplied after the tax. (Hint: at a price of $8.00 the quantity supplied was 36000. With the tax, this quantity supplied will be supplied only at a price of $9.00, so the Quantity supplied with a tax at 9.00 is 36000) You continue, so at $8.50, the producer only gets 7.50, so is only willing to offer 32000 units. Qd Qs Price 000s) (000s) $9.00 20 8.50 24 8.00 7.50 7.00 6.50 6.00 28 32 36 40 44 44 40 38 32 28 24 20 Quantity supplied after tax Qs(t) (000s) 36 32 28 24 3. On your graph, plot the new supply curve after the imposition of the tax (in a different colour, to differentiate the supply curve).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Lesson 10 Question 9
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