Suppose that the demand curve for barley can be characterized by the equation P = 100...

Suppose that the demand curve for barley can be characterized by the equation P = 100 - 2Qd. Suppose further that price was $10.00 and a $10.00 tax is imposed on the market. a) How many barleys would be purchased at a price of $10.00? After tax? b) What is the amount of tax revenue generated by the tax? c) How much excess burden is generated by the tax? d) What is the amount of consumer surplus before and after the tax? What is the difference in consumer surplus? Is it equal to excess burden plus the tax revenue?

Expert Solution

Rahul Sunny answered 7 months ago

Suppose the demand curve in a city is given by P = 100 - 2Q, where...

Suppose the demand curve in a city is given by P = 100 - 2Q, where P denotes price and Q the local GDP. The supply curve is given by P = 10 + Q. Now Suppose that due to an initial impulse of ΔX = 10 (Increase in exports) and further induced increases in local incomes the new induced demand curve changes to P = 150 - 2Q. Where are the local GDP and the corresponding income multiplier if...

Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes...

Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes price in dollars and Q denotes total unit sales. The cost equation is TC = 200 + 22Q. a. Determine the firm’s profit-maximizing output and price. b. Suppose that there is a change in the production process so that the cost equation becomes TC = 80 + 12Q + Q2. Determine the resulting effect on the firm’s output: c. Using the two...

Suppose the domestic demand for coffee is given by the equation Q = 100 - P,...

Suppose the domestic demand for coffee is given by the equation Q = 100 - P, domestic supply by the equation Q = P. The world price for coffee is $20 per unit. The government decides to impose an import quota limiting imports to 10 units. How much deadweight loss will this generate? Please explain clearly using graphs.

1. Suppose the Demand curve for heaters is P = 100 – Q. Suppose firms face...

1. Suppose the Demand curve for heaters is P = 100 – Q. Suppose firms face a constant Marginal Cost of $20 per heater. In perfect competition (part 2 of the class) we learned that the competitive price of heaters would be $20 (with constant MC, MC = AC). What would the monopoly price and quantity of heaters be? Compare the welfare of these two markets (consumer surplus, producer surplus, and deadweight loss). (2 pts)

Demand for education is characterized by the following equation: P = 240 – 4Q. The marginal...

Demand for education is characterized by the following equation: P = 240 – 4Q. The marginal private cost of education is P = 40 + 6Q. Production of education also creates a per unit positive externality equal to 2Q. Suppose that the market is currently unregulated (i.e., the positive externality is not currently being corrected for in the market). What is output and price? The marginal social benefit (MSB) accounts for the marginal private benefit of production as well as...

Suppose that budding economist Buck measures the inverse demand curve for toffee as P = $100...

Suppose that budding economist Buck measures the inverse demand curve for toffee as P = $100 – QD , and the inverse supply curve as P = Qs. Buck’s economist friend Penny likes to measure everything in cents. She measures the inverse demand for toffee as P = 10,000 – 100QD, and the inverse supply curve as P = 100Qs. a. Suppose market participants successfully lobby congress for a $45 price ceiling. What is demand at $45? What is supply...

Suppose that the retail market for widgets has inverse demand curve P = 100 – Q....

Suppose that the retail market for widgets has inverse demand curve P = 100 – Q. Widget retailing is controlled by a monopoly retailer, R Inc., which obtains its widgets from the monopoly wholesaler W Inc. at a wholesale price of w per widget. In addition R Inc. incurs a cost of $2 per widget to promote the product and sell to consumers. Wholesaler W Inc. obtains the widgets in from monopoly manufacturer M Ltd. at a manufacturing price of...

Suppose a simple monopoly faces the following demand curve for its product: P = 100 -...

Suppose a simple monopoly faces the following demand curve for its product: P = 100 - Q. Suppose the monopolist faces total costs given by: TC = 20Q. a. Draw the demand curve, the marginal revenue curve, and the marginal cost curve. Make sure to label all axes and intercepts. b. What are the values for the simple monopoly profit-maximizing price and quantity? Label these on the graph. c. Consider the consumers' surplus that is associated with the monopolist’s optimal...

Suppose that market demand can be represented as p = 100 - 3Q. There are 10...

Suppose that market demand can be represented as p = 100 - 3Q. There are 10 identical firms producing an undifferentiated product, each with the marginal cost function MC = 3q. If the firms form a cartel, the marginal revenue for the cartel is MR = 100 - 6Q. Compare the competitive outcome with the cartel outcome. What is the individual firm's incentive to cheat on the cartel? (show the procedure you reach your conclusion)

Suppose a firm's inverse demand curve is given by P = 120 - 0.5Q and its cost equation is

Suppose a firm's inverse demand curve is given by P = 120 - 0.5Q and its cost equation isC = 420 + 60Q + Q2.Find the firm's optimal Q, P, and π two ways…first, by using the profit and marginal profit equations and then by setting MR = MC. Also, provide an Excel-created graph of the demand curve, MR curve, and MC curve (please do the excel graphs).Suppose instead that the firm can sell any and all of its output...

Question