The local diesel market is represented by Q = (912 - P)/12.5 and Q = (P - 315)/11 where P is in dollars (USD) per liter of fuel and Q shows liters of fuel (in millions). Currently a tax of USD 130 per liter of diesel is charged. It is requested: (a) Calculate the amount (Q) that is transacted after the tax has been applied. b) Show in detail the calculations of a). Is there any difference between the price observed by suppliers and demanders? If so, what is the price observed by the producer and what is the price observed by the consumer? how much is the government's revenue? If there is an efficiency loss, how much is it? GRAPH c) At present, there are arguments in favor of increasing the tax on diesel and others in favor of decreasing it (at least temporarily). Mention at least ONE argument in favor of increasing this tax and ANOTHER argument in favor of decreasing it. And finally, conclude in favor of which argument you are in favor of
COURSE:
The local diesel market is represented by
Q = (912 - P)/12.5 and Q = (P - 315)/11
where P is in dollars (USD) per liter of fuel and Q shows liters of fuel (in millions). Currently a tax of USD 130 per liter of diesel is charged.
It is requested:
(a) Calculate the amount (Q) that is transacted after the tax has been applied.
b) Show in detail the calculations of a). Is there any difference between the
c) At present, there are arguments in favor of increasing the tax on diesel and others in favor of decreasing it (at least temporarily). Mention at least ONE argument in favor of increasing this tax and ANOTHER argument in favor of decreasing it. And finally, conclude in favor of which argument you are in favor of.
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