2. The diagram below shows supply and demand in a local market for cubic metres (m3) of garden soil. Price ($ per m³) 60 55 50 45 40 35 30 25 20 15 10 5 D 10 20 30 40 50 60 70 80 90 100 110 120 Quantity (m³ per day) a. At the equilibrium market price, determine the following values: total revenue received by sellers .consumer surplus .producer surplus . total economic surplus b. Now suppose that government impose a tax on sellers of $20 in this market. At the resulting price of $40 per m3, determine each of the same values as in part (a). C. c. What is the deadweight loss to the economy in this market when tax is imposed? Show the area of this loss in the diagram.

2. The diagram below shows supply and demand in a local market for cubic metres (m3) of garden soil. Price ($ per m³) 60 55 50 45 40 35 30 25 20 15 10 5 D 10 20 30 40 50 60 70 80 90 100 110 120 Quantity (m³ per day) a. At the equilibrium market price, determine the following values: total revenue received by sellers .consumer surplus .producer surplus . total economic surplus b. Now suppose that government impose a tax on sellers of $20 in this market. At the resulting price of $40 per m3, determine each of the same values as in part (a). C. c. What is the deadweight loss to the economy in this market when tax is imposed? Show the area of this loss in the diagram.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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