Consider a market where supply and demand are given as follows:Demand: Qd = 56 – 2PSupply: Qs = -10 + P.Suppose the government imposes a price floor of $25, and agree to purchase any andall units that consumer do not buy at the price.(a)Solve mathematically for market equilibrium price and quantity.(b) Determine the cost to the government of buying firms' unsold units.(c) Do you think the market would actually be better off if a price floor were imposedby the government? From the perspective of consumer, producer and socialsurplus, explain rationally with the aid of a demand and supply diagram.

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Answered: Consider a market where supply and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Demand: D(p) = 2110- 7p Supply: S(p) = 23p - 500 a) First, assume that no caxes are imposed. Find the equilibrium price and quantity. Price= $ Quantity = 9. b) Now assume a specific tax of $8 per unit is imposed on suppliers. Find the new equilibrium price and quantity. Price = $ Quantity = 8. c) What portion of the tax is paid by the consumer and what portion of the tax is paid by the producer? Consumer pays $ esc Producer pays $ 9. d) How much tax revenue is generated for the government? Tax revenue = $ ! 7 :9 4 FI 2 9,262 F2 # 3 20 F3 DOD $ 4 F4 % 5 FS MacBook Pro *** A 6 e tv A F6 ◄◄ & 7 F7 ► 11 * O FB F9 Instructions ^ F10 FI O

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