Given the supply and demand fucntion Supply- Q= 200p-500 Demand- 5000-300p Suppose that the president is concerned that they are producing Deadweight Loss in this case and are not even raising any revenue. The president proposes instituting a tax that will still result in a Q of 600 units, but, as the presdient says, it would also increase Total Surplus because of the revenue it raises. If the Presdient wants to reduce the quantity sold in this market to be equal to 600 units, then what size tax does the presedient need to put into place?
Given the supply and demand fucntion Supply- Q= 200p-500 Demand- 5000-300p Suppose that the president is concerned that they are producing Deadweight Loss in this case and are not even raising any revenue. The president proposes instituting a tax that will still result in a Q of 600 units, but, as the presdient says, it would also increase Total Surplus because of the revenue it raises. If the Presdient wants to reduce the quantity sold in this market to be equal to 600 units, then what size tax does the presedient need to put into place?
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section: Chapter Questions
Problem 4CQQ
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Question
Given the
Supply- Q= 200p-500
Demand- 5000-300p
Suppose that the president is concerned that they are producing
and are not even raising any revenue. The president proposes instituting a tax that will still result in a Q of 600 units, but, as the presdient says, it would also increase
Total Surplus because of the revenue it raises.
If the Presdient wants to reduce the quantity sold in this market to be equal to 600 units, then
what size tax does the presedient need to put into place?
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