This year, the price-demand and price-supply equations for bourbon whiskey are,respectively:p = 850 - 0.25Q (price-demand)p = 200 + 0.15Q (price-supply)Quantities Qd and Q are measured in million of cases, and the pricep is for onecase.The government has just announced that, effective immediately, it will impose anexcise tax of $20 per case on all distilled spirits, including bourbon whiskey.Question:How would the tax excise change the revenues from selling bourbon whiskey?Hint: Calculate the revenues before the tax is implemented and the revenues afterthe tax is implemented.Revenues drop by $1.5 billionRevenues drop by $3.125 billionRevenues increase by $4.29 billionRevenues drop by $2.5 billionRevenues increase by $1.5 billion

The equilibrium price and quantity of a good are determined by the demand and the supply of the…

Answered: This year, the price-demand and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that the demand curve for a product is given bye Q = 100 – 2 Px + 7 Py,“ where P = £20, where P, = £20 is the price of another product- %3D a) Calculate the demand for good X in this market at the current price level. How much revenue would the firm make? b) If the firm wishes to increase total revenue, would it need to increase or decrease the current price of good X? c) Calculate the cross-price point elasticity between goods X and Y at the current price level. Are the goods complements or substitutes?
You own Earthworm Excavators. Your company is the sole manufacturer of super-sized excavators that are used in the world’s largest mining operations. The U.S. has recently lifted export restrictions on the product you sell, so you can now sell your equipment in the world market along with sales in the domestic market. You hire an economist to estimate the following (inverse) demand curves per year for these distinct markets: Domestic market : Pd = $1200 - $10QdForeign market : Pf = $600 - $5Qf where P refers to prices charged in each market in thousands of dollars and Q refers to the annual quantities demanded in each market. The total costs (in thousands of dollars) of your annual operation are given by: TC = 900 + 200Q a. If you decide to offer you machines at a single price to all potential buyers, at what price will the foreign buyers be priced out of the market?b. What is the market demand function if you decide to offer the machines to all potential buyers at a single…
Suppose the demand and supply for Xbox-One are: Qd = 500 - 2P, Qs = -100 + 4P . Assume that consumers demand 75 less Xbox units at each price. Also, a new tax has been imposed on foreign microchips, increasing the costs of production, and reducing supply by 35 units at each price Given this information find: a. CS0 = $ b. CS2 = $ c. PS2 = $
In the graph below supply curve is perfectly inelastic. What is the own-price elasticity of supply when we are on the market equilibrium price and price increases by 15% ? If necessary, round to the nearest two decimal points. P8 7 69 4 0 1 2 3 4 7 M 8 Q 9
Daily demand for gasoline at a Gas Station is described by Q = 980 - 300p, where Q are gallons of gasoline sold and p is the price in dollars. Gas Station's supply is Q = -2,980 + 3,000p. Suppose the state government places a tax of 18 cents on every gallon of gasoline sold. (a) What are the before-tax and after-tax equilibrium quantities of gasoline Q? (b) What are the changes in consumer's and producer's surplus due to tax? (c) What is the deadweight loss resulting from this tax?
The short-run demand and supply elasticities for crude oil are -0.076 and 0.088, respectively. The current price per barrel is $30 and the short-run equilibrium quantity is 23.84 million barrels per year. What will be the effects on the market price and quantity if the government decides to purchase (and store away) an additional 2 million barrels of oil? Assume that the additional consumption of oil by the government results in a parallel shift of the supply curve to the left by 2 million barrels per day What could be the economic rationale for buying and storing oil?
Refer to Example 2.10, which analyzes the effects of price controls on natural gas. Recall that the free-market wholesale price of natural gas (PG) is $6.40 per mcf (thousand cubic feet), the average price of crude oil (Po) is $50 per barrel, and production and consumption of gas (Q) are 23 Tcf (trillion cubic feet). Suppose the price elasticity of supply of natural gas is 0.20, the cross-price elasticity of supply of natural gas with respect to the price of oil is 0.12, the price elasticity of demand for natural gas is -0.60, and the cross-price elasticity of demand for natural gas with respect to the price of oil is 1.25. If so, then the linear supply curve for natural gas is OA. Q=1.346-1.638PG +0.055PO B. Q=12.056+0.368PG -0.495PO- O C. Q=16.296 +0.495P + 1.638Po O D. Q=10.562 +1.066PG-0.327Po O E. Q=15.648+0.719P+0.055Po
To encourage people to stop smoking the government of a country introduces an indirect tax of 20% on the price of cigarettes(Currently 10$ per packet). The price elasticity of demand for cigarettes in the country is estimated to be 0.6. Describe the likely impact the tax will have on a, the demand for cigarettes b, government revenue
Correctly illustrate the market (supply and demand curve). Make sure to correctly shade the area of the tax. a) Washington state has a salmon market which sells salmon at a price of P. At that price, Q lbs. of salmon will be consumed in one week. Elasticity of supply: relatively elastic Elasticity of demand: relatively inelastic In addition, suppose Washington state were to levy an excise tax collected by producers.
Suppose that both wheat and corn have an income elasticity of 0.1 a. If the average income in the economy increases by 2 percent each year, by what percentage does the quantity demanded of wheat increase each year, holding all other factors constant? Holding all other factors constant, if 10 billion bushels are demanded this year, by how many bushels will the quantity demanded increase next year if incomes rise by 2 percent? b. Given that average personal income doubles in the United States about every 30 years, by about what percentage does the quantity demanded of corn increase every 30 years, holding all other factors constant?

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