Chapter 10: Policy Analysis RS) The U.S. demand and supply of gasoline in 2011 were given respectively by Qº=202-19P and Q³ =73 +17P billions of gallons. The equilibrium price was $3.58. A) How large would be the market distortion (shortage or surplus) caused by a price ceiling at $3.30? B) Instead of a price ceiling, if the government imposed an additional $0.40 tax per gallon (to be paid by the sellers), what would be the new equilibrium price of gasoline? And what would have been the additional tax burden on the buyers?
Chapter 10: Policy Analysis RS) The U.S. demand and supply of gasoline in 2011 were given respectively by Qº=202-19P and Q³ =73 +17P billions of gallons. The equilibrium price was $3.58. A) How large would be the market distortion (shortage or surplus) caused by a price ceiling at $3.30? B) Instead of a price ceiling, if the government imposed an additional $0.40 tax per gallon (to be paid by the sellers), what would be the new equilibrium price of gasoline? And what would have been the additional tax burden on the buyers?
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 3PA
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