If there is neither a tax nor a subsidy, you are willing to pay $44 for 1 kg of coffee, a total of $77 for 2 kgs of coffee, and a total of $90 for 3 kg of coffee. If the government implements a $6.50 per-kg subsidy, payable to the producer, what is the highest per-kg price at which you purchase 3 or more kgs of coffee?
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If there is neither a tax nor a subsidy, you are willing to pay $44 for 1 kg of coffee, a total of $77 for 2 kgs of coffee, and a total of $90 for 3 kg of coffee. If the government implements a $6.50 per-kg subsidy, payable to the producer, what is the highest per-kg price at which you purchase 3 or more kgs of coffee?
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- Suppose that the government has a goal to reduce the demand for cigarettes in support of a health program. Given this, the government decided to impose a per-unit tax of 40 centavos per pack that is levied on the sellers or placed on the sale of cigarettes by the government. This causes a shift of the market supply of cigarettes from S to S' as shown. Price ($ per pack) S 1.50 1.40 1.30 1.15 D₂ Quantity (Millions of pack) 3 4 5 Answer the following questions regarding this case. 1. Determine the deadweight loss to society caused by the imposition of the tax. (3 points) Interpret the result. (3 points) 1 2. What tax revenue is expected to be collected by the government? (4 points) 1.25 + 1 1 D₁On April 20, 2010, an oil-drilling platform owned by British Petroleum exploded in the Gulf of Mexico, causing oil to leak into the gulf at estimates of 1.5 to 2.5 million gallons per day for well more than 2 months. As a result of the oil spill, the government closed more than 25 percent of federal waters, which devastated the commercial fishing industry in the area. Explain how the reduction in supply from the reduced fishing waters either increased or decreased consumer surplus and producer surplus, and show these changes graphically.What effect will each of the following have on the supply of auto tires? The granting of a 50-cent-per-unit subsidy for each auto tire produced.
- If a tax of $1.20 is imposed on consumers in this market, what is the tax revenue?What is the minimum price that producer is willing to accept for 1500 bottles? Price per Ice-cream (Rs.) Demand for Ice cream (Qd) Supply for Ice cream (Qs) 140 500 1500 120 750 1200 100 1000 1000 80 1250 750 60 1500 600 40 1750 300In a country the Government determines to increase the tax on gasoline by $0.20 per gallon. The price of gasoline after taxes though only goes up by $0.15. Does this mean the gas station is not collecting the correct amount of taxes?
- The consumer surplus for John is $10 and his maximum willingness to pay for the product is $30 What would have been the market price?Fresh broccoli is really good for you, and the Surgeon General of the United States wants people to eat more of it. “People would eat more broccoli if it didn’t cost so much,” the Surgeon General says. So the Surgeon General proposes placing a price ceiling on fresh broccoli of $1 per pound, which is well below the market price of about $2 per pound. Will the price ceiling on broccoli achieve the Surgeon General’s goal of increasing the amount of broccoli consumed? Explain why or why not. (A properly drawn and labeled graph likely will improve your answer, but a graph is not necessary for full credit on this question.In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. As a result, the government is able to raise $750 per month in tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by 25 per month. 50 per month.
- Refer to Example 2.10, which analyzes the effects of price controls on natural gas. Recall that the free-market wholesale price of natural gas (PG) is $6.40 per mcf (thousand cubic feet), the average price of crude oil (Po) is $50 per barrel, and production and consumption of gas (Q) are 23 Tcf (trillion cubic feet). Suppose the price elasticity of supply of natural gas is 0.20, the cross-price elasticity of supply of natural gas with respect to the price of oil is 0.12, the price elasticity of demand for natural gas is -0.60, and the cross-price elasticity of demand for natural gas with respect to the price of oil is 1.25. If so, then the linear supply curve for natural gas is OA. Q=1.346-1.638PG +0.055PO B. Q=12.056+0.368PG -0.495PO- O C. Q=16.296 +0.495P + 1.638Po O D. Q=10.562 +1.066PG-0.327Po O E. Q=15.648+0.719P+0.055PoSuppose the supply of a good by domestic firms is QSD = 10 + 2P and the supply by foreign firms is QSF = 10 + P. The domestic demand for the product is given by Qd = 30 − P. 1. In the absence of a quota, what is the total supply of the good? 2. What are the equilibrium price and quantity of the good? 3. Suppose a quota of 10 units is imposed. What is the total supply of the product? 4. Determine the equilibrium price in the domestic market under the quota of 10 units.The diagram below represents the market for butter. o 2 4 6 8 10 12 Quantity Demanded and Supplied of Butter (thousands of kilograms/year) 14 Refer to Figure 4-1. What is the shortage or surplus of butter at a market price of $5 per kilogram? の す 3. (per kilogram) Price of butter
