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a) Sketch the market for SUVS including the supply and demand curves according to the schedule and label the equilibrium price and quantity.

a) Sketch the market for SUVS including the supply and demand curves according to the schedule and label the equilibrium price and quantity.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In order to reduce environmentally harmful emissions, the state of California wanted to discourage the use of large SUVS. The state found that the demand and supply schedules of SUVS were the following: Price of SUVS Quantity of SUVS Demanded (in thousands) Quantity of SUVS Supplied (in thousands) $33,000 $32,000 $31,000 $30,000 $29,000 $28,000 $27,000 $26,000 $25,000 $24,000 450 100 400 200 350 300 300 400 250 500 200 600 150 700 100 800 50 900 a) Sketch the market for SUVS including the supply and demand curves according to the schedule and label the equilibrium price and quantity. b) Suppose the California decided to institute a tax of $3000 per SUV purchased. On your graph, illustrate the effects of the excise on the market for SUVS. Include the price paid by consumers, the price received by producers, the quantity sold with the tax, the consumer surplus, the producer surplus, the government revenue, and the deadweight| loss due to the tax. c) Calculate the consumer and producer surplus before and after the tax, the amount of government revenue collected, and the deadweight loss.
Transcribed Image Text:In order to reduce environmentally harmful emissions, the state of California wanted to discourage the use of large SUVS. The state found that the demand and supply schedules of SUVS were the following: Price of SUVS Quantity of SUVS Demanded (in thousands) Quantity of SUVS Supplied (in thousands) $33,000 $32,000 $31,000 $30,000 $29,000 $28,000 $27,000 $26,000 $25,000 $24,000 450 100 400 200 350 300 300 400 250 500 200 600 150 700 100 800 50 900 a) Sketch the market for SUVS including the supply and demand curves according to the schedule and label the equilibrium price and quantity. b) Suppose the California decided to institute a tax of $3000 per SUV purchased. On your graph, illustrate the effects of the excise on the market for SUVS. Include the price paid by consumers, the price received by producers, the quantity sold with the tax, the consumer surplus, the producer surplus, the government revenue, and the deadweight| loss due to the tax. c) Calculate the consumer and producer surplus before and after the tax, the amount of government revenue collected, and the deadweight loss.
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