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Suppose that the demand curve and supply functions are qp = 300– 5p and qs = 100+20p, respectively. (a) On the same graph, draw the demand and supply curves with price on the vertical axis. (b) What is the quantity and price in the equilibrium? (c) Calculate consumer surplus and producer surplus. (d) Suppose the government implements a $5 dollar per unit sales tax. i. Calculate the new quantity and the price paid by the consumer. ii. Calculate the consumer surplus, producer surplus, tax revenue, and deadweight loss. iii. What share of the tax is passed on to the consumer and what share of the tax is passed on to the producer? iv. Graph the taxed equilibrium on a new graph. (e) Recalculate parts a through d but now suppose that quantity supplied is perfectly inelastic. Specifically, suppose that qs = 100. (f) Recalculate parts a through d but now suppose that quantity demanded is perfectly inelastic. Specifically, suppose that qp = 400

Suppose that the demand curve and supply functions are qp = 300– 5p and qs = 100+20p, respectively. (a) On the same graph, draw the demand and supply curves with price on the vertical axis. (b) What is the quantity and price in the equilibrium? (c) Calculate consumer surplus and producer surplus. (d) Suppose the government implements a $5 dollar per unit sales tax. i. Calculate the new quantity and the price paid by the consumer. ii. Calculate the consumer surplus, producer surplus, tax revenue, and deadweight loss. iii. What share of the tax is passed on to the consumer and what share of the tax is passed on to the producer? iv. Graph the taxed equilibrium on a new graph. (e) Recalculate parts a through d but now suppose that quantity supplied is perfectly inelastic. Specifically, suppose that qs = 100. (f) Recalculate parts a through d but now suppose that quantity demanded is perfectly inelastic. Specifically, suppose that qp = 400

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Suppose that the demand curve and supply functions are qp = 300– 5p and qs = 100+20p, respectively. (a) On the same graph, draw the demand and supply curves with price on the vertical %3D axis. (b) What is the quantity and price in the equilibrium? (c) Calculate consumer surplus and producer surplus. (d) Suppose the government implements a $5 dollar per unit sales tax. i. Calculate the new quantity and the price paid by the consumer. ii. Calculate the consumer surplus, producer surplus, tax revenue, and deadweight loss. iii. What share of the tax is passed on to the consumer and what share of the tax is passed on to the producer? iv. Graph the taxed equilibrium on a new graph. (e) Recalculate parts a through d but now suppose that quantity supplied is perfectly inelastic. Specifically, suppose that qs = 100. (f) Recalculate parts a through d but now suppose that quantity demanded is perfectly inelastic. Specifically, suppose that qp = 400 %3D
Transcribed Image Text:Suppose that the demand curve and supply functions are qp = 300– 5p and qs = 100+20p, respectively. (a) On the same graph, draw the demand and supply curves with price on the vertical %3D axis. (b) What is the quantity and price in the equilibrium? (c) Calculate consumer surplus and producer surplus. (d) Suppose the government implements a $5 dollar per unit sales tax. i. Calculate the new quantity and the price paid by the consumer. ii. Calculate the consumer surplus, producer surplus, tax revenue, and deadweight loss. iii. What share of the tax is passed on to the consumer and what share of the tax is passed on to the producer? iv. Graph the taxed equilibrium on a new graph. (e) Recalculate parts a through d but now suppose that quantity supplied is perfectly inelastic. Specifically, suppose that qs = 100. (f) Recalculate parts a through d but now suppose that quantity demanded is perfectly inelastic. Specifically, suppose that qp = 400 %3D
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