Suppose U = ×1×2 subject to, 10x1+ 20x2 = 100 To reduce the consumption of x2 by half, government imposed 100% tax on x2. But the government wants to increase the consumption of x1 and put the consumers on their original level of utility. a. How much quantity subsidy is needed for x1? b. How much income subsidy is needed to draw the same outcome?
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- Many governments subsidise electric vehicles. Draw two sup- ply and demand diagrams (one for electric vehicles and one for petrol- powered vehicles) to show the impact of an electric vehicle subsidy. As- sume that an increase in electric vehicles sales reduces petrol powered vehicles by the same amount. On these diagrams show: (a) The quantity of both types of vehicles before the subsidy. (b) The quantity of both types of vehicles after the subsidy. (c) The deadweight losses in both markets before and after the subsidy. 4. is a fuel excise or an electric vehicle subsidy a better policy response to address externalities associated with driving? Your answer should draw on the answers above and could also include: Which policy is simpler to administer. How the two policies impact use of other forms of transport (like public transport or riding a bike). Which policy is fairer. Any additional information that you would like to know to inform your decision Note:- Do not provide…Consideracompetitivemarketwheremarketdemandandthemarketsup- ply are given, respectively, byQD =1000−100P and QS =100P a)Findthecompetitiveequilibriumprice,quantity,andproducersurplus. (b) Suppose the government wants to help the consumers by imposing a price ceiling of Pc = 4. Find the market equilibrium price, quantity, and producer surplus. (c) Suppose now the producers are complaining, and the government de- cides to keep the price ceiling policy, but at the same time, the government will give a subsidy of s per unit to the producers. What is value of s that can make the producers as well off as before imposing the price ceiling (that is, producer surplus equals to the value in part (a))? Please express final numerical answers in decimal formatSuppose the government applies a specific tax to a good where the demand elasticity is -0.8, and the supply elasticity is 1.4. If a specific tax of $3.25 was placed on the good, to the arest cent, what is the price increase that consumers would pay? What is the tax incidence? I
- The demand for cigarettes, which create negativeexternalities through secondhand smoke, is oftenrelatively inelastic. That is, when the price of cigarettes changes, the quantity demanded changes bya smaller portion. Using this fact, explain to whatextent you think a tax on cigarettes would fulfilleach of the goals of taxation.why do comsumers pay the tax on goods if the elasticity of demand is less than the elasticty of supply?suppose that the local government of Columbus decides to institute a tax on seltzer consumers. Before the tax, 20,000 packs of seltzer were sold every week at a price of $10 per pack. After the tax, 15,000 packs of seltzer are sold every week; consumers pay $12 per pack (including the tax), and proceeds nrecieve $5 per pack.
- I don't understand the difference of the impact on the indifference curve for when there is a subsidy on energy price vs when there is a decrease in energy prices. what is the difference in change of both of these from an original indifference curve where there is no change in price or no subsidy implemented. i have also done energy on x axis and food on the y axis so could you draw me to separate graphs of first the impact of an energy subsidy and then a second one with the impact of energy prices decreasing once the subsidy is removed.Using a diagram explain how when elasticity of a good is zero applied at the level of government when setting pricesFor this question, the demand is P = 145 - 3Q & supply is P = 35 + 2Q. To enable more citizens to buy more gasoline, the Government decides to give gasoline producers a subsidy of $5 per unit- Using the supply and demande quations from #2. What price will consumer's pay and how much gasoline will they buy (note the answersm ay be fractions or in decimal points)? How much will the Government spend on the subsidy? What will be the change in producer surplus?
- 1) From the graph above on the welfare impact of subsidies, indicate which area represents the increase in consumers' surplus induced by the subsidy: A) PoL K Po-SPo B) Po JA C) AK Po-SPo D) Po JK Po-SPo PA Po Pe-SPo O' M Q, QSuppose Jolene buys apples weekly. If the price of apples were to drop, Jolene would experience in . a decrease an increase a decrease an increase a decrease total revenue consumer surplus her budget constraint marginal utility willingness to pay Suppose the government levies a tax of $0.50 per pack on the buyers of cigarettes. Suppose also that the price elastic- ity of demand for cigarettes is 1.2 and the price elasticity of supply is 0.7. Because this tax is levied on the sale of a specifi c good, it is an excise tax. a progressive tax. a regressive tax. a proportional tax. a lump-sum tax. After this tax is levied, total surplus will , and the price received by producers (not including the tax) will . increase decrease increase decrease increase increase by exactly $0.50 fall by exactly $0.50 fall by less than $0.50 fall by less than $0.50 increase by more than $0.50 If economists were to study the tax incidence in this cigarette market, they would…1. consider public policy aimed at smoking a. studies indicate that the price elasticity of the demandmfor cigarettes is about 0.4. If a packet of cigarette is currently priced at $6 and goverment wants to reduce smoking by 20percent, by how miuch should it increase through levying a tax b. if the government permanently increase the price of cigarette will the policy have a larger effect on smoking one year from now or five years from now. explain c. studies also show that teenagers have a higher price elasticity of demand for cigarette than adults do. why might this be true