A government is contemplating an increase from $2to $2.5 in the toll on a highway that is - at present -used by 9,000 cars per day. After the toll is increased,it is projected that only 7,000 cars per day will use it.Assuming that the weekly marginal cost of highwayuse is equal to $1.8 per car:calculate the change in government welfare, thechange in consumer welfare and the net socialsurplus change.

Approach to solving the question:Given that, by increasing the toll from $2 to $2.5, it was…

Answered: A government is contemplating an…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Identify at least one positive externality from running a donut shop. Identify at least one negative externality from running a donut shop. Explain how these positive and negative externalities could impact the donut shop’s profits. (Hint: think subsidy for positive externality and tax for negative externality.) Draw two graphs that show the price of donuts before and after the positive and negative externality impacted the price of your donuts.
Discuss real world examples of Consumer and Producer Surplus ?
Please explain
The Australian government have suggested that they might need to increase GST to help fund the COVID-19 rescue package. GST is a tax on goods and services usually paid at the point of sale. Consider the market for bread. Suppose a loaf costs $4.15 and includes a 15-cent tax per loaf. 2. What determines how the tax burden is shared between buyers and sellers?
The market for smart phone applications is characterized by the following demand and supply curves. QD = D(P) = 15 - 3P QS = S(P) = 5 + 10P (a) Calculate the equilibrium price and quantity for this market. (b) The government is considering introducing a per unit subsidy of t on each electric car that is purchased. Suppose that the statutory incidence of this subsidy will be on buyers. Using the equilibrium conditions, D(Pn - t) = S(Pn) = Q* (i.e. that demand equals supply in equilibrium), derive an equation in terms of es and ed that describes what fraction of the subsidy is borne by buyers/consumers. (c) Suppose that the unit tax is set at t = 0.1 per unit. What is the excess burden of this tax per dollar of revenue raised? (d) Suppose that we incorrectly assumed that supply was perfectly elastic and there was no impact of the tax on the equilibrium price received by sellers. Would EB/Tax Revenue be higher or lower than what you calculated in part (c)? In 4 sentences, explain your…
For years the government has subsidized higher education through grants; consider the demand and supply for college credit hours at a local private liberal arts collegeQD = 6,000 – 300PQS = 700P – 500 where P is the price, in hundreds of dollars, and Q is the number of credit hours per semester. Suppose the government subsidizes credit hours at a rate of $120 per hour. Calculate changes in consumer surplus. What is the size of the deadweight loss?
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Your student group is setting up an internship fair. You invite companies looking for interns and students looking for internships and offer them a place to connect. The UofT wants to encourage this event and offers a per-internship of $5000. Whom do you recommend they give the $5000 to?--the student who gets the internship, the company that hires the student or split the money between them equally? What would be the effect of a $5000 subsidy on the number of internships? Why?

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