The market for a product is defined by the following demand and supply curves: Qd=26-0.1P Qs=-10+0.3P...

The market for a product is defined by the following demand and supply curves:

Qd=26-0.1P

Qs=-10+0.3P

Assume that an ad valorem tax of 50 per cent (i.e. t=0.5) is placed on the product.

(a) On the diagram you have drawn in (i), add the new supply curve reflecting the impact of the ad valorem tax.

(b) Derive mathematically the new equilibrium consumer and producer prices and quantity.

(c) Find the amount of tax revenue gained by the government

Expert Solution

Rahul Sunny answered 9 months ago

A market is described by the following supply-and-demand curves: QS = 2P QD = 300−P The...

A market is described by the following supply-and-demand curves: QS = 2P QD = 300−P The equilibrium price is_______and the equilibrium quantity is________. Suppose the government imposes a price ceiling of $90. This price ceiling is [binding/not binding], and the market price will be______. The quantity supplied will be ______ , and the quantity demanded will be_______. Therefore, a price ceiling of $90 will result in [a shortage/ a surplus/ neither a shortage nor surplus]. Suppose the government imposes a...

Consider the following Market Demand and Supply Curves. Qd = 30-P Qs = P a.What is...

Consider the following Market Demand and Supply Curves. Qd = 30-P Qs = P a.What is the equilibrium quantity and price? b.What is the Consumer Surplus? c.What is the Producer Surplus? d.If the world price is 15, how much will be imported?

Consider the following Market Demand and Supply Curves. Qd = 30-P Qs = P a.If the...

Consider the following Market Demand and Supply Curves. Qd = 30-P Qs = P a.If the world price is 5, 1.how much will be imported? 2.What is the change in Consumer Surplus? 3.What is the change in Producer Surplus? b. If a tariff of $2 is imposed 1.how much will be imported? 2.What is the change in Consumer Surplus as a result of tariff? 3.What is the change in Producer Surplus as a result of tariff? 4.What is the government...

2. Supply, Demand and Elasticity: The demand for a product is Qd=200-5P-2Px and supply is Qs=10+2P,...

2. Supply, Demand and Elasticity: The demand for a product is Qd=200-5P-2Px and supply is Qs=10+2P, where Q is the quantity of the product, in thousands of units, P is the price of the product, and Px is the price of another good X. A. When Px = $25, what is the equilibrium price and quantity sold of the product? B. At the equilibrium price and quantity, what is the own price elasticity of demand for the product? C. What...

The demand and supply equations for a product are given by QD = 20-P QS = -10 +2P

The demand and supply equations for a product are given by QD = 20-P QS = -10 +2P 1. Calculate the equilibrium price and quantity. 2. Calculate the price elasticity of demand and the price elasticity of supply at the above equilibrium point. 3. An excise tax of $1 per unit is imposed on the producers of the product. Calculate the new equilibrium price and quantity. Calculate the consumer and producer tax burden ( as a percentage of...

1. Suppose we have the following supply and demand curves. QD = 500 − 2PD QS...

1. Suppose we have the following supply and demand curves. QD = 500 − 2PD QS = 100 + 2PS a) Determine the competitive equilibrium for this market. b) Suppose that we impose a per unit tax of $50 on this market. Determine the following: 1. The price that sellers receive. 2. The price that consumers pay. 3. The number of units sold given the tax. c) What is the share of the burden borne by consumers? What is the...

The supply and demand curves for gasoline have been determined: Qd = 150 - p Qs...

The supply and demand curves for gasoline have been determined: Qd = 150 - p Qs = 2p A) Calculate the economic benefit, the price counts efficiency and the ratio price counts and Calculate the private income of the 20 units produced. What is the market price? B) Now suppose that the consumption tax of $ 6 per unit is still in force. A project that will use 10 gasoline units as input. Graphically illustrate this cost.

Market demand is given as Qd = 200 – P. Market supply is given as Qs...

Market demand is given as Qd = 200 – P. Market supply is given as Qs = 4P. a. Calculate equilibrium price and quantity a. If an excise tax of $4 per unit is imposed on sellers, calculate the price consumers pay Pc and the price sellers receive Ps. c. Also, calculate the dead weight loss and consumer surplus after the tax.

Market demand is given as QD = 50 – 2P. Market supply is given as QS...

Market demand is given as QD = 50 – 2P. Market supply is given as QS = 3P + 10. Each identical firm has MC = 2.5Q and ATC = 2Q. a. What quantity of output will a single firm produce? What is the price? b. Calculate each firm’s profit? What will happen to it in the long-run? Explain the process. c. Draw the individual demand, MR, supply and ATC curves. Show profit in the diagram

Market demand is given as QD = 300 – 6P. Market supply is given as QS...

Market demand is given as QD = 300 – 6P. Market supply is given as QS = 4P. Each identical firm has MC = 6Q and ATC = 3Q. What is a firm’s profit? Show your work

Question