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- The market supply and demand for a product are shown in the diagram below. PRICE $6 Supply Demand 80 200 QUANTITY (a) Is the price elasticity of supply less than one, equal to one, or greater than one? Explain. (b) Calculate consumer surplus at the equilibrium price. Show your work. (C) Now suppose the government imposes a per-unit tax of $1 on producers. (i) What happens to total revenue received by producers after they pay the tax to the government? Explain. (ii) Will producer surplus increase, decrease, or stay the same? (iii) Will total surplus increase, decrease, or stay the same? Explain.The market supply and demand for a product are shown in the diagram below. (a) Is the price elasticity of supply less than one, equal to one, or greater than one? Explain. (b) Calculate consumer surplus at the equilibrium price. Show your work. (c) Now suppose the government imposes a per-unit tax of $1 on producers. (i) What happens to total revenue received by producers after they pay the tax to the government? Explain. (ii) Will producer surplus increase, decrease, or stay the same? (iii) Will total surplus increase, decrease, or stay the same? Explain.8. Suppose we want regular cars to be gradually replaced by electric cars. There are several kinds of government interventions that could be used to make this happen, or at least to push the car market to produce and sell more electric cars. Explain how a tax could be used for this purpose, and then explain how a subsidy could be used for this purpose.
- 4.Which of the following will cause the supply of a product to decrease? a) governent subsidy for the product b)an increase in consumer' income c) a decrease in the price of the product d)an increase in the excise tax on the product32. Assuming a $7 per unit tax is imposed, the new price to sellers will be $______. a) 10 b) 12 c) 14 d) 16 e) 19 f) 28 g) 36 h) 48 i) 66 j) 70 k) 841. The government wishes to encourage students to become more literate in economics and is therefore giving a S10 per unit subsidy to the purchasers of microeconomics textbooks. Given the following demand and supply, what are the economic effects of this subsidy? Illustrate with a diagram. Show work. P= 100 - Qa P= 20 + 3Q. (1) (2) Original Price Original Output New Price Consumer Pays New Output New Price Producer Receives Benefit to consumer Benefit to producer Cost to government
- Exit A 5 tax on sugar-sweetened beverages currently generates $400,000 in revenue per day. If the tax increases to 8%, the revenue the tax generates will drop to $370,000. This tells us that in this range of tax rates, the effect outweighs the effect. Multiple Choice quantity, price O quantity, Income price; quantity price, Income5. At present, the price of $10, a football in the US and 5 million are sold annually. Market demand has shown that the demand curves are linear, and that price elasticity of market demand is -4.0 and the price elasticity of supply is +2.0. a) Calculate the demand and supply curves for footballs in the US. b) The US government imposes a $3 tax on every football sold in the country. How much revenue will the tax raise, and how much will the tax effect consumer surplus and producer surplus?|What is the total surplus : Price 110 - Supply 100 a) 800 b) 1000 c) 1500 d) 2000 e) 2500 f) 3500 g) 5000 90 80 70 60- Demand 50 45 40 + 30 20 10 ++++++ 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 Duantity
- 3.In the market for nutritional bars there are two types of consumers: men and women. Suppose that the market equilibrium happens at the same price and quantity for both the women and men's market. At the market equilibrium, the price elasticity of demand for men is ϵMD,P=−2 and the price elasticity of demand for women is ϵWD,P=−2.4. If the supply for nutritional bars is perfectly elastic and if the government implements a subsidy of $A$A in this market, we can be sure that: The increase in the consumer surplus for women will be ?? (greater tlower tequal) than the increase in the consumer surplus for men. The deadweight loss will be greater in which market? (women, men, both)a) What is the Equilibrium Price and Equilibrium Quantity b) If the government imposes a $15 per unit tax on sellers on this good what is the new quantity sold in units, how much will the buyers pay, how much will sellers receive?, and how much will the government receive in tax revenue? c) What is the price elasticity of demand and over this price change? What about the supply? d) Based on the elasticities calculated above, who will bear a greater burden from the tax? Why?The demand and supply equations for a product are: Q"= 300 – 6P and Q' = -40 + 6P. Determine the market equilibrium and draw graphs. Suppose that the government decides to impose a flat tax of 10% on each unit sold. Show that the price that consumers pay would be the same if the government imposed a tax of Rs. 1.70 per unit sold. Draw graphs and explain. • Also calculate the total revenue earned by sellers before and after the tax, the tax revenue raised by the government, changes in consumer and producers surplus and dead weight loss.