3) The demand for ski lessons is given by D(p) 100-2p and the supply is given by S(p)= 3p. %3D (a) Compute the equilibrium price and quantity, and the consumer and producer surplus and total welfare. (b) Suppose a tax of $10 per ski lesson is imposed on consumers. Compute the new price paid by consumers and the price received by sky instructors, as well as the new consumer and producer surplus and total welfare. (c) Suppose a senator from a mountainous state suggests that although ski lesson consumers are rich and deserve to be taxed, ski instructors are poor and deserve a subsidy. He proposes a $6 subsidy on production while maintaining the $10 tax on consumption of ski lessons. Show that this policy would have no different effects than a tax of $4 per lesson.

3) The demand for ski lessons is given by D(p) 100-2p and the supply is given by S(p)= 3p. %3D (a) Compute the equilibrium price and quantity, and the consumer and producer surplus and total welfare. (b) Suppose a tax of $10 per ski lesson is imposed on consumers. Compute the new price paid by consumers and the price received by sky instructors, as well as the new consumer and producer surplus and total welfare. (c) Suppose a senator from a mountainous state suggests that although ski lesson consumers are rich and deserve to be taxed, ski instructors are poor and deserve a subsidy. He proposes a $6 subsidy on production while maintaining the $10 tax on consumption of ski lessons. Show that this policy would have no different effects than a tax of $4 per lesson.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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