Demand Function - Qd = 64 - p and Supply Function- Qs= 4p. (A) Suppose the federal govt. taxes $1.50 on sellers. How is the tax burden distributed on buyers and sellers? Calculate Deadweight loss as well. B) If a general tax rate of $t per unit is to be paid by sellers then find value of t that maximizes govt. tax revenue. C) If govt choses t to maximise the sum of consumers surplus, producers surplus and tax revenue, calculate optimum choice. D) If a producers' lobby can influence the government to set a price floor Px which maximises producers surplus rather than social surplus. What price floor will the lobby recommend? Calculate the DWL, assuming sellers only produce an amount equal to qty. demanded at controlled price.

Demand Function - Qd = 64 - p and Supply Function- Qs= 4p. (A) Suppose the federal govt. taxes $1.50 on sellers. How is the tax burden distributed on buyers and sellers? Calculate Deadweight loss as well. B) If a general tax rate of $t per unit is to be paid by sellers then find value of t that maximizes govt. tax revenue. C) If govt choses t to maximise the sum of consumers surplus, producers surplus and tax revenue, calculate optimum choice. D) If a producers' lobby can influence the government to set a price floor Px which maximises producers surplus rather than social surplus. What price floor will the lobby recommend? Calculate the DWL, assuming sellers only produce an amount equal to qty. demanded at controlled price.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Demand Function - Qd = 64 - p and Supply
Function- Qs= 4p.
(A) Suppose the federal govt. taxes $1.50 on
sellers. How is the tax burden distributed on
buyers and sellers? Calculate Deadweight loss
as well.
B) If a general tax rate of $t per unit is to be
paid by sellers then find value of t that
maximizes govt. tax revenue.
C) If govt choses t to maximise the sum of
consumers surplus, producers surplus and tax
revenue, calculate optimum choice.
D) If a producers' lobby can influence the
government to set a price floor Px which
maximises producers surplus rather than
social surplus. What price floor will the lobby
recommend? Calculate the DWL, assuming
sellers only produce an amount equal to qty.
demanded at controlled price.

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