EBK MACROECONOMICS
5th Edition
ISBN: 8220106773925
Author: KRUGMAN
Publisher: MAC HIGHER
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Question
Chapter 14, Problem 6P
a.
To determine
Effect of withdrawal.
b.
To determine
Effect of withdrawal when bank maintains reserve ratio of 10%.
To determine
Contraction in money supply.
d.
To determine
Contraction in money supply when bank maintains reserve ratio of 20%.
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The graph shows the supply and demand curves of high-fructose corn syrup, a sweetener commonly used in the production of
sweets and soda due to its low cost. In an effort to curb health issues, Congress puts an excise or commodity tax on corn syrup
at $2 per liter.
1. Shade in the region of the graph representing the total tax revenue that this tax will generate.
2. Shade in the region of the graph representing the deadweight loss that this tax will generate.
Price ($) per liter
10
9
Supply
8
7
60
5
3
2
Demand
↓
0
0
1
2
3
4
5
6
7
8.
9
10
Quantity (millions of liters)
00
MacBook Air
Tax Revenue
Deadweight Loss
000
000
F4
AA
DII
DD
L
F5
F6
F7
F8
F9
F10
F11
%
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