The market demand function for corn is Q = 30 - 2P. The market supply function is Q = 5P-2.5, both measured in billions of bushels per year. Suppose the government imposes a $8.10 tax per bushel. What will be the effects on aggregate surplus, consumer surplus, and producer surplus? What will be the deadweight loss created by the tax? Instructions: Round your quantities to the nearest whole number. Round prices, surpluses and deadweight losses to 2 decimal places. a. What are the initial equilibrium effects? Complete the table below. After-tax equilibrium price After-tax equilibrium quantity After-tax equilibrium consumer surplus Initial equilibrium price Initial equilibrium quantity Initial equilibrium consumer surplus Initial equilibrium producer surplus Initial equilibrium aggregate surplus b. What are the effects after the government imposes a $8.10 tax per bushel. Complete the table below. After-tax equilibrium producer surplus $ Government revenue After-tax equilibrium aggregate surplus Deadweight loss Before the tax $ 9.64 per bushel billion bushels billion $ $ $ billion billion After the tax per bushel billion bushels billion billion billion billion billion

The market demand function for corn is Q = 30 - 2P. The market supply function is Q = 5P-2.5, both measured in billions of bushels per year. Suppose the government imposes a $8.10 tax per bushel. What will be the effects on aggregate surplus, consumer surplus, and producer surplus? What will be the deadweight loss created by the tax? Instructions: Round your quantities to the nearest whole number. Round prices, surpluses and deadweight losses to 2 decimal places. a. What are the initial equilibrium effects? Complete the table below. After-tax equilibrium price After-tax equilibrium quantity After-tax equilibrium consumer surplus Initial equilibrium price Initial equilibrium quantity Initial equilibrium consumer surplus Initial equilibrium producer surplus Initial equilibrium aggregate surplus b. What are the effects after the government imposes a $8.10 tax per bushel. Complete the table below. After-tax equilibrium producer surplus $ Government revenue After-tax equilibrium aggregate surplus Deadweight loss Before the tax $ 9.64 per bushel billion bushels billion $ $ $ billion billion After the tax per bushel billion bushels billion billion billion billion billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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