Consider a market where supply and demand curves are given by Q = 4Pand Q = 12 - 2P. Calculate the equilibrium price and quantity in thismarket. Now consider a government that collects a unit tax of 0.2 lirasfor every unit of good sold in the market from the producers. What is thenew supply curve? What is the new market equilibrium quantity? Whatis the price that consumers pay? What is the price producers get? Whatis the tax incidence on consumers? producers?

The objective of the question is to find the equilibrium price and quantity in a market given the…

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

Problem 1QTC

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The following graph shows the market for the long-distance bus rides. In the absence of taxes, the equilibrium price of a ride is $5 and the equilibrium quantity is 10 million rides. Suppose that regulator levies an excise tax on bus service providers. The amount of excise tax equals $2 per ride. How much will bus service providers get per ticket after the tax is imposed? $5.50 $4 $4.50 $5
7.7 pleaase explain
Suppose that the local government of Santa Fe decides to institute a tax on soda consumers. Before the tax, 45,000 liters of soda were sold every week at a price of $10 per liter. After the tax, 38,000 liters of soda are sold every week; consumers pay $14 per liter (including the tax), and producers receive $8 per liter. The amount of the tax on a liter of soda is 3 that falls on producers is 5 per liter. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True per liter. Of this amount, the burden that falls on consumers is 3 O False per liter, and the burden
In the market for candy, researchers have estimated the following demand and supply curves. Demand: P= 8 - Q/100 Supply: P= (3Q)/700 If the government imposes an excise tax of $0.50 per unit. What is tax revenue out of this tax? (Remember that the tax does not change the demand and supply curves).
Consider the market described by the graph below where the vertical distance between points A and B represents a tax in the market. 22 20 10 16 14 12 10 Price Demand 100 200 300 400 500 600 700 800 900 1000 Supply Quantity The per-unit burden of the tax on buyers is $16 and the tax results in a loss of $2700 in consumer surplus. $6 and the tax results in a loss of $900 in consumer surplus $6 and the tax results in a loss of $2700 in consumer surplus. $16 and the tax results in a loss of $900 in consumer surplus. 2.5 po
Suppose that the demand curve for wheat is and the supply curve is Producer surplus Q = 400-40p The government provides producers with a specific subsidy of s= $2 per unit. How do the equilibrium price and quantity change? The equilibrium price decreases by $1 and the equilibrium quantity increases by $40 units. (Enter numeric responses using real numbers rounded to two decimal places.) What effect does this tax (subsidy) have on consumer surplus, producer surplus, government revenue, welfare, and deadweight loss? Consumer surplus increases by $ 220. by $ Qs = 40p.
Consider the market for BP gasoline. If the market has a very elastic supply and a very inelastic demand, how would the burden of a tax on BP gasoline be shared between producers and consumers? Draw a graph to support your answer.
The following graph depicts a market where a tax has been imposed. Pe was the equilibrium price before the tax was imposed, and Qe was the equilibrium quantity. After the tax, PC is the price that consumers pay, and PS is the price that producers receive. QT units are sold after the tax is imposed. NOTE: The areas B and C are rectangles that are divided by the supply curve ST. Include both sections of those rectangles when choosing your answers. What is the amount of the tax, as measured along the y axis? PC + PS Pe – PS PC – PS PC – P* Pe + PS
Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss? The greater are the price elasticities of supply and demand, the greater is the deadweight loss. The greater is the price elasticity of supply and the smaller is the price elasticity of demand, the greater is the deadweight loss. The smaller are the decreases in quantity demanded and quantity supplied, the greater the deadweight loss. The smaller is the wedge between the effective price to sellers and the effective price to buyers, the greater is the deadweight loss.
The table shows the market for chocolate bars Quantity demanded Quantity supplied (thousands per day) Price (dollars per chocolate bar) 1.10 1.20 1.30 1.40 1.50 50 5 40 10 30 15 20 20 10 25 A tax of $0.30 per chocolate bar is imposed on sellers What is the new price of a chocolate bar? Who pays the tax? The new price of a chocolate bar following the tax is $ The tax is A. paid totally by the buyer B. paid totally by the seller C. split between the buyer and the seller
Suppose the government imposes a per-unit tax on the sellers of potato chips, shifting the supply curve upwards from S1 to S2, as shown in the following figure Price (per box) 35 26 20 200 300 S₂ S₁ D Quantity (boxes) a. How does the per-unit tax affect the quantity transacted, the price paid by buyers and the price received by sellers? b. Calculate the government tax revenue. Do the buyers or the sellers bear a larger tax burden?

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