Figure 8-4 Suppose the government imposes a $10 per unit tax on a good. PRICE 24 22 20 18 16 14 12 10 8 6 4 2 A B D J K C Refer to Figure 8-4. The tax causes consumer surplus to decrease by the area Oa. A. Ob. A + B + C. OC. A + B + C + D + F. Od. B + C. G M Supply Demand 36 9 12 15 18 21 24 27 30 33 36 QUANTITY

Figure 8-4 Suppose the government imposes a $10 per unit tax on a good. PRICE 24 22 20 18 16 14 12 10 8 6 4 2 A B D J K C Refer to Figure 8-4. The tax causes consumer surplus to decrease by the area Oa. A. Ob. A + B + C. OC. A + B + C + D + F. Od. B + C. G M Supply Demand 36 9 12 15 18 21 24 27 30 33 36 QUANTITY

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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John was a high school teacher earning $ 80,000 per year. He quit his job to start his own business in pizza catering.In order to learn how to run the pizza catering business, John enrolled in a TAFE to acquire catering skills.John’s course was for 3 months. John had to pay $2,000 as tuition for the 3 months. After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed $50,000.00 from his friend whom he pays 6 percent interest per year. Further, to start the business John used his own premises. He was receiving $12,000from rent per year. Finally, to start the business John uses $50,000 he had been given by his father to go on holiday to USA. John’s first year of business can be summarised as follows: Item Amount $ Revenue- Pizza Section 400,000 Revenue- Beverages Section 190,000 2 Cashiers (wages per worker) 55,000 Pizza ingredients 50,000 Manager 75,000…
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Consumer and Producer surplus Stax P $100 $70 $50 $45 $X $5 D 40 60 Assume an excise tax that has caused a decrease in Supply as shown on the graph above Show all work. а. How much is the tax per- unit b. How much is the value of X (intercept of the green line). How do you describe what that value is? C. How much is the consumer surplus before the tax? d. How much is producer surplus before the tax? е. How much is the consumer surplus after the tax? f. How much is producer surplus after the tax? g. How much is the deadweight loss as a result of the tax
Use Exhibit to answer question Price PB Po Ps ABI I I C Size of tax per unit ய, F Q₁ Qo Supply Demand Quantity If there is no tax placed on the product in this market, consumer surplus is the area a. A. O b. D+ C+ B. O C. C + D + F. d. A + B + C. O e. A + B + E.
Use Exhibit to answer question a. C + D + F. b. C + F. C. A + B + C + D. d. D. Price e. A + B + E. PB Po Ps AIBI В C Size of tax per unit w F Q₁ If there is no tax placed on the product in this market, producer surplus is the area Supply Demand Quantity
a. Before the tax is imposed, the equilibrium price is $ 3 and the equilibrium quantity is 10. This generates an economic surplus of $
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Price P2 P1 P3 Figure A-1 Ice Cream I NI KI X I I W q2 ql S2 S1 D Quantity (scoops) Figure A-1 represents the market for ice cream before and after a per-scoop tax. What does the area w represent? O the resulting loss of producer surplus O the resulting loss in consumer and producer surplus O the resulting tax revenue generated O the resulting consumer surplus generated
Price $150 200 250 300 350 400 450 500 550 600 650 1. Equilibrium price $350 2. Quantity 50 3. Consumer Surplus? 6250 4. Producer Surplus? 6250 500 7. Remove the tax. Imposes a price floor $100 below the equilibrium price a Fiquilibrium price $350 and quantity? 50 Quantity Demanded 100 90 5. What is the total surplus? 12500 6. Suppose a $200 unit tax is placed on the good being sold. How much tax revenue is to be made? 4000 b. Resulting amount of surplus/shortage if any (0 if none) 0 8. Remove the price floor Impose a price ceiling $50 below the equilibrium price a Equilibrium price $350 and quantity? 50 b. Resulting amount of surplus/shortage (0 if none) o 80 70 60 50 40 30 20 10 0 Quantity Supplied 10 20 30 40 50 60 70 80 90 100 . How much deadweight loss is created (0 if none)?
In the diagram, consumer surpluses before and after the tax are ______ and ______, respectively. A + B; B A + B + C; A D + E + F; B B + C; A + B
The vertical distance between points A and B represents a tax in the market. 22- Price 222 20 18- 16 14 12- 22 10 8 9 Supply Demand 100 200 300 400 500 600 700 800 900 1000 Quantity Refer to Figure 8-6. Total surplus with the tax in place is