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ADVANCED ANALYSIS Suppose the equation for the demand curve for some product X is P=8-0.6Q and the supply curve is P= 2 + 0.4Q. a. What are the equilibrium price and quantity? Instructions: Enter your answer for equilbrium price rounded to 2 decimal places and enter your answer for quantity as a whole number. Price = $ Quantity = b. Now suppose an excise tax is imposed on X such that the new supply equation is P= 4 +0.4Q. How much tax revenue will this excise tax yield the government? Instructions: Enter your answer rounded to 2 decimal places. $ c. In the diagram below, draw the new supply curve (with the excise tax) and identify the area of the graph that represents the revenue generated by the tax.

ADVANCED ANALYSIS Suppose the equation for the demand curve for some product X is P=8-0.6Q and the supply curve is P= 2 + 0.4Q. a. What are the equilibrium price and quantity? Instructions: Enter your answer for equilbrium price rounded to 2 decimal places and enter your answer for quantity as a whole number. Price = $ Quantity = b. Now suppose an excise tax is imposed on X such that the new supply equation is P= 4 +0.4Q. How much tax revenue will this excise tax yield the government? Instructions: Enter your answer rounded to 2 decimal places. $ c. In the diagram below, draw the new supply curve (with the excise tax) and identify the area of the graph that represents the revenue generated by the tax.

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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Discussion Question 20-11 ADVANCED ANALYSIS Suppose the equation for the demand curve for some product X is P=8-0.6Q and the supply curve is P= 2 + 0.4Q. a. What are the equilibrium price and quantity? Instructions: Enter your answer for equilbrium price rounded to 2 decimal places and enter your answer for quantity as a whole number. Price = $ Quantity b. Now suppose an excise tax is imposed on X such that the new supply equation is P= 4 +0.4Q. How much tax revenue will this excise tax yield the government? Instructions: Enter your answer rounded to 2 decimal places. $ generated by the tax. c. In the diagram below, draw the new supply curve (with the excise tax) and identify the area of the graph that represents the revenue Instructions: (1) Use the tool provided, 'S+T,"; to draw the new supply curve for the equation P = 4 +0.4Q. Locate the endpoints at Q = 0 and Q = 10. (2) Use the tool provided, 'B,'; to identify the new equilibrium price and quantity. (3) Use the four-point shading tool provided Tax Revenue,"; to identify the area that represents the tax revenue collected. (4) Use the three-point shading tool provided, "Efficiency Loss," to identify the area that represents the efficiency loss of the tax. An Excise Tax Price (S) 8 7 6 5 2 1 E 0 D 1 2 3 4 5 6 7 8 9 10 11 12 Quantity Tools S+T B Tax Revenue Efficiency Los < Prev 7 of 17 Next 2
Transcribed Image Text:Discussion Question 20-11 ADVANCED ANALYSIS Suppose the equation for the demand curve for some product X is P=8-0.6Q and the supply curve is P= 2 + 0.4Q. a. What are the equilibrium price and quantity? Instructions: Enter your answer for equilbrium price rounded to 2 decimal places and enter your answer for quantity as a whole number. Price = $ Quantity b. Now suppose an excise tax is imposed on X such that the new supply equation is P= 4 +0.4Q. How much tax revenue will this excise tax yield the government? Instructions: Enter your answer rounded to 2 decimal places. $ generated by the tax. c. In the diagram below, draw the new supply curve (with the excise tax) and identify the area of the graph that represents the revenue Instructions: (1) Use the tool provided, 'S+T,"; to draw the new supply curve for the equation P = 4 +0.4Q. Locate the endpoints at Q = 0 and Q = 10. (2) Use the tool provided, 'B,'; to identify the new equilibrium price and quantity. (3) Use the four-point shading tool provided Tax Revenue,"; to identify the area that represents the tax revenue collected. (4) Use the three-point shading tool provided, "Efficiency Loss," to identify the area that represents the efficiency loss of the tax. An Excise Tax Price (S) 8 7 6 5 2 1 E 0 D 1 2 3 4 5 6 7 8 9 10 11 12 Quantity Tools S+T B Tax Revenue Efficiency Los < Prev 7 of 17 Next 2
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