Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 5.A, Problem 6QE

(a):

To determine

Effect of per gallon tax on the supply and demand equation.

(b):

To determine

New equilibrium price and quantity.

(c):

To determine

Price of producers and consumers.

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Students have asked these similar questions
The figure below represents the market for Gasoline, where initially the equilibrium price was $5.60. The picture shows the effect of a $1.50 tax on gasoline. Using the information from the figure, what is the price elasticity of demand(Using the Midpoint method) when moving from equilibrium to the new demand after the tax?(Input the answer in absolute value and round it to 2 decimal places)
The figure below represents the market for Gasoline, where initially the equilibrium price was $5.60. The picture shows the effect of a $1.50 tax on gasoline. Using the information from the figure, what is the price elasticity of supply(Using the Midpoint method) when moving from equilibrium to the new supply after the tax?(round your answer to 2 decimal places)
a) What is the Equilibrium Price and Equilibrium Quantity b) If the government imposes a $15 per unit tax on sellers on this good what is the new quantity sold in units, how much will the buyers pay, how much will sellers receive?, and how much will the government receive in tax revenue?  c) What is the price elasticity of demand and over this price change? What about the supply? d) Based on the elasticities calculated above, who will bear a greater burden from the tax? Why?
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