It's a specialized market, so we'll just have to assume we have enough buyers and sellers to have our demand and supply curves be straight, smooth lines. The following information applies to the market before any tax is applied: Vertical intercept, demand curve: 600 Vertical intercept, supply curve: 100 P* = $300 Q* = 50 Later, a tax is put on the market. The per-unit tax is $100, and it makes the price received by sellers fall to $260. With the tax, only 40 units are sold. (These numbers are not very realistic - but just go with it.) Carefully following all numeric instructions, calculate the price paid by buyers. Calculate market total surplus AFTER the tax is applied. Calculate producer surplus
It's a specialized market, so we'll just have to assume we have enough buyers and sellers to have our demand and supply curves be straight, smooth lines. The following information applies to the market before any tax is applied:
Vertical intercept, demand curve: 600
Vertical intercept, supply curve: 100
P* = $300
Q* = 50
Later, a tax is put on the market. The per-unit tax is $100, and it makes the price received by sellers fall to $260. With the tax, only 40 units are sold. (These numbers are not very realistic - but just go with it.)
Carefully following all numeric instructions, calculate the price paid by buyers.
Calculate market total surplus AFTER the tax is applied.
Calculate
Calculate total market surplus BEFORE the tax is applied.
Calculate DWL after the tax is applied.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
