EBK MACROECONOMICS
10th Edition
ISBN: 9781259662447
Author: Colander
Publisher: YUZU
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Question
Chapter 5, Problem 13QE
(a)
To determine
(b)
To determine
Equilibrium price and quantity with a unit tax.
(c)
To determine
Equilibrium price and quantity with a unit tax on consumers.
(d)
To determine
Impact of the tax levied on different groups.
Expert Solution & Answer
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Students have asked these similar questions
Draw the supply and demand curves associated with the table below.
Price Qs Qd
$0.00 50 200
0.50 100 175
1.00 150 150
1.50 200 125
2.00 250 100
(a) What is equilibrium price and quantity?
(b) What is equilibrium price and quantity with a $0.75 per-unit tax levied on suppliers? Demonstrate your answer graphically.
(c) How does your answer to b change if the tax were levied on consumers, not suppliers? Demonstrate your answer graphically.
(d) What conclusion can you draw about the difference between levying a tax on suppliers and consumers?
Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further,
suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.25 per fountain drink. Which of the
following statements is correct?
a. The price paid by buyers is $0.25 per drink more than it was before the tax.
b. This tax causes the supply curve for fountain drinks to shift downward by $0.50 at each quantity.
c. This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity.
d. Forty percent of the burden of the tax falls on buyers.
C). Suppose that the equilibrium price for this product is $4 and the equilibrium quantity is 100 units. If the
government imposes a price floor of $5 what happens? Draw the new graph explaining how quantities are affected
by that decision.
D). Now, consider that the government imposes a tax of $0.50 on sellers. Show what happens to the initial
equilibrium price of $4 and draw the new quantity on the graph.
E). The government imposes a tax of $0.50 on buyers. Show what happens to the initial equilibrium price of $4 and
draw the new quantity on the graph.
F). Explain how the burden of the two different taxes (as seen in C and D, above) is divided between buyers and
sellers.
G). If you are a buyer in these cases, would you prefer a relatively elastic or inelastic demand curve compared to the
supply curve? Why?
H). If you are a seller in these cases, would you prefer a relatively elastic or inelastic supply curve compared to the
demand curve? Why
Chapter 5 Solutions
EBK MACROECONOMICS
Ch. 5.1 - Prob. 1QCh. 5.1 - Prob. 2QCh. 5.1 - Prob. 3QCh. 5.1 - Prob. 4QCh. 5.1 - Prob. 5QCh. 5.1 - Prob. 6QCh. 5.1 - Prob. 7QCh. 5.1 - Prob. 8QCh. 5.1 - Prob. 9QCh. 5.1 - Prob. 10Q
Ch. 5.A - Prob. 1QECh. 5.A - Prob. 2QECh. 5.A - Prob. 3QECh. 5.A - Prob. 4QECh. 5.A - Prob. 5QECh. 5.A - Prob. 6QECh. 5.A - Prob. 7QECh. 5.A - Prob. 8QECh. 5.A - Prob. 9QECh. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - Prob. 3QECh. 5 - Prob. 4QECh. 5 - Prob. 5QECh. 5 - Prob. 6QECh. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QECh. 5 - Prob. 11QECh. 5 - Prob. 12QECh. 5 - Prob. 13QECh. 5 - Prob. 14QECh. 5 - Prob. 15QECh. 5 - Prob. 16QECh. 5 - Prob. 17QECh. 5 - Prob. 1QAPCh. 5 - Prob. 2QAPCh. 5 - Prob. 3QAPCh. 5 - Prob. 4QAPCh. 5 - Prob. 5QAPCh. 5 - Prob. 1IPCh. 5 - Prob. 2IPCh. 5 - Prob. 3IPCh. 5 - Prob. 4IPCh. 5 - Prob. 5IPCh. 5 - Prob. 6IPCh. 5 - Prob. 7IPCh. 5 - Prob. 8IPCh. 5 - Prob. 9IPCh. 5 - Prob. 10IPCh. 5 - Prob. 11IPCh. 5 - Prob. 12IPCh. 5 - Prob. 13IPCh. 5 - Prob. 14IP
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- Please written by computer source Suppose that the demand curve for a product is given by Q = 100 −10p and the supply curve is Q = 10p. Assume that income effects (elasticities) are small so consumer surplus is a good measure of consumer welfare. (a) What is the equilibrium price and quantity with no distortions? (b) The government imposes a tax of $2.00 per unit sold. What is the new equilibrium quantity? Sketch the market equilibrium in a graph. (c) Given the tax what is the change in consumer surplus? What is the change in producer surplus? What is the change in government revenue? What is the net Dead Weight Loss from the tax? (d) Say the government proposes to use the revenue from the tax to pay for snacks in our last ECON 312A lecture. The total social benefits from the snacks would be $82.00. Will the tax increase overall welfare if the revenue is used to buy the snacks? What is the dollar value of the net gain or loss to society?arrow_forward3. In the market for Samsung Galaxy S22, the demand function is Q = 200 - 2P, while the supply function is Q = 2P - 20, where P denotes the price, and Q the quantity of Samsung Galaxy S22. a. Calculate the equilibrium price and quantity! b. To reduce addiction to social media, the government imposes a specific tax of $5 on sellers. Calculate the new equilibrium price and quantity c. Now suppose the tax of $5 is imposed on buyers rather than sellers. Find the new equilibrium price and quantity.arrow_forwardPART II: Below is the quantity demanded and supplied in the market for skis. What is the equilibrium price and quantity? What is the equilibrium price sellers receive, equilibrium price buyers pay, and equilibrium quantity if there is a $20 tax on buyers? a. b. P 0 Qd 250 Qs 200 400 600 800 50 1000 0 o 0 200 30 150 60 100 90 120 150arrow_forward
- Use the following figure to answer the question: What is the consumer surplus in this market when there is a price floor created at the "price above equilibrium" line? Price A B C D E F Supply Price above equilibrium Demand Quantity A+B (area above equilbrium price and below demand, up to the quantity with the restriction) O (area below demand and above the price above the equilbrium line) O A+B+E (area under the demand above the equilbrium price) O A+B+C (area under the demand over to the quantity resulting from regulation)arrow_forward2. Using the following graph, answer the following questions. Also, show/Label your answers for parts a-e on the graph as well. Price 20 18 16 14 12 10 6. 4 6 8 10 12 14 16 Quantity 2 a. Suppose a $4 per-unit tax is imposed on the sellers of this good. What price will buyers pay for the good after the tax is imposed? b. Suppose a $4 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?arrow_forward3.4 The demand function for a product is Qd = 1,600 - 10P, and its supply function is Qs = 400 + 5P. Calculate the equilibrium price and equilibrium quantity of the good. Check your answer by drawing the demand and supply curves in a figure. What ways can government control prices in the market for goods and services. Explain their outcomes. Use diagrams to illustrate your answers. What policies can lead to shifts of the demand or supply curves? Provide examples familiar to you.arrow_forward
- Use the graph to answer the following question: Which of the following statements is most true? A) Producers will pay the entire tax. B) Consumers will pay 1/3 of the tax. C) Producers will pay 1/3 of the tax. D) Consumers will pay the entire tax.arrow_forwardAnswer clearly n quicklyarrow_forwardUSE TABLE #1: Now, assume the market for electric automobiles is an efficient market. The consumer surplus for the market for electric automobiles is $_____. (Remember to use a comma, if a comma is needed and to include the decimal point and two numbers to the right of the decimal point).arrow_forward
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