2. Assume that the unit tax is $6.00 and the pre-tax equilibrium quantity and equilibrium price is 600 units and $100.00 respectively. Also, assume that the post-tax equilibrium quantity is 500 units. If E, = E, = 2.5, compute the following: i. The total tax burden? j The total tax revenue received by the government? k. The post-tax equilibrium?

2. Assume that the unit tax is $6.00 and the pre-tax equilibrium quantity and equilibrium price is 600 units and $100.00 respectively. Also, assume that the post-tax equilibrium quantity is 500 units. If E, = E, = 2.5, compute the following: i. The total tax burden? j The total tax revenue received by the government? k. The post-tax equilibrium?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 18 Exhibit 19-6 Price of Good X 0 Quantity of Good X Refer to Exhibit 19-6. Suppose the three equilibrium quantities are 700, 800, and 900, and the two equilibrium prices are $2.20 and $2.75. What is the tax revenue collected from the tax that shifted S 1 to S 2 when D 1 is the relevant demand curve? a. $440 Ob. $600 O c. $900 Od. $800
2. Draw a supply and demand curve and show the equilibrium price and quantity. Explain graphically in the same diagram what happens to the equilibrium price and quantity if there is an expectation of higher future prices of the product and there is an increase in taxation of the product in the economy?
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1
3. Use the graph and the inverse demand equation (P=50 - .5Q), inverse supply equation (P=0.333Q) with a subsidy of s=10 given to sellers instead of a tax. The inverse supply equation with the subsidy is (P = 0.333Q –s): a. Illustrate and calculate CS, PS and TS after the subsidy (TS after the subsidy – cost of subsidy) b. Explain what happens to CS, PS and TS with the subsidy. Did the subsidy result to DWL?
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1. The monthly demand function is p, = 26,000,000 qand the supply function %3D before taxation is ps = 1,000,000 + 3,750q, where q is in millions and p is in dollars. a. Find the equilibrium point. What tax per item will maximize the total tax revenue? What is the maximum revenue from the tax? How many items will have to be sold to get the maximum revenue from the tax? b. С. What is the equilibrium point after the tax? Graph the three functions, the demand function, the supply function before the tax and the supply function after the tax. d.
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A sales tax levied at the rate $T does not have the same effects on the market's equilibrium as does an excise tax levied at the rate $T . Select one: a. True b. False