Suppose the quantity demanded of avocados is given by Qd = 104 -40P + 20pt +...

Suppose the quantity demanded of avocados is given by Qd = 104 -40P + 20pt + 0.01Y , where P is the price of avocados, pt is the price of tomatoes, and Y is the average income. The supplied quantity of avocados is Qs = 58 + 15P -20pf , where pf is the price of fertilizer. Suppose pt = $0.8, Y = $4, 000, and pf= $0.40.

(a) What are the equilibrium price and quantity of avocados? Illustrate the demand

and supply functions of avocados on a clearly marked graph.

(b) Suppose the government charges a $1.10 specific tax per avocado, to be paid by

consumers. What will be the after-tax market price of avocados (that is, the

producer price)? What is the incidence of this taxon consumers? Illustrate

the effects of the tax on a graph

(c) What is the welfare effect of this taxation on consumers and producers? How

much revenue does the government collect from this tax? What is the welfare

effect on society as a whole?

Please answer the third question in detail

Expert Solution

Rahul Sunny answered 2 years ago

Suppose the quantity demanded of avocados is given by Qd = 104 − 40P + 20pt...

Suppose the quantity demanded of avocados is given by Qd = 104 − 40P + 20pt + 0.01Y , where P is the price of avocados, pt is the price of tomatoes, and Y is the average income. The supplied quantity of avocados is Qs = 58 + 15P − 20pf , where pf is the price of fertilizer. Suppose pt = $0.8, Y = $4, 000, and pf = $0.40. 1 (a) What is the equilibrium price and quantity...

Suppose that the demand for curve is QD = 1000-40P, (where QD is the number of...

Suppose that the demand for curve is QD = 1000-40P, (where QD is the number of gallons of liquor demanded and P is the price per gallon), and the supply curve for liquor is QS =60P (where QS is the number of gallons supplied). For all the questions below, graph and calculate (and label) all intercept, slopes and equilibrium points. a. Compute equilibrium prices and quantities in the absence of the tax. b. In an effort to reduce alcohol consumption,...

Given the following information QD = 240-5P QS= P Where QD is the quantity demanded, Qs...

Given the following information QD = 240-5P QS= P Where QD is the quantity demanded, Qs is the quantity supplied and P is the price. Suppose the government decides to impose a tax of $12 per unit on sellers in this market. Determine the Demand and Supply equation after tax.

Given the following information, QD = 240-5P QS= P Where QD is the quantity demanded, Qs...

Given the following information, QD = 240-5P QS= P Where QD is the quantity demanded, Qs is the quantity supplied and P is the price. Suppose the government decides to impose a tax of $12 per unit on sellers in this market. Determine the total surplus after tax.

Given the estimated coconut demand equation as Qd= 1200-9.5P+16.2Pp +0.2Y where Qd is the quantity demanded,...

Given the estimated coconut demand equation as Qd= 1200-9.5P+16.2Pp +0.2Y where Qd is the quantity demanded, P= the price of coconut, Pp= the price of palm oil, and Y = income. Assuming P= 45cents, Pp=the price palm oil =31cents, and Qd = 1275 thousand metric tons per year: a. Is the demand for coconuts price elastic, or inelastic? Based on your answer, should management raise or reduce the price in order to increase its operating revenue? b. Given Y= $150,...

Suppose that the quantity demanded of visits to a doctor per year is given by 10X...

Suppose that the quantity demanded of visits to a doctor per year is given by 10X = 120 - (1/2)P where X is the number of visits and P is the price the patient pays for a visit. How many visits would the patient make if he or she had to pay the full price of a visit, $100? How many visits would a patient make if he or she was insured and had to pay only a 20% co-insurance...

Refer to following table, in which Qd is the quantity of yen demanded, P is the...

Refer to following table, in which Qd is the quantity of yen demanded, P is the dollar price of yen, Qs is the quantity of yen supplied in year 1, and Qs' is the quantity of yen supplied in year 2. All quantities are in billions. Qd P Qs Qs' 20 130 40 60 30 125 30 50 40 120 20 40 50 115 10 30 Assume that the exchange rate is fixed against the dollar at the equilibrium exchange...

The following is the quantity demanded and quantity supplied equation in the market. Qs=2p, Qd=12-p

The following is the quantity demanded and quantity supplied equation in the market. Qs=2p, Qd=12-p What is the market equilibrium price and supply for the market above? If there was a tax of 6 dollars on firms how much will the firms receive from the buyers ( the price they get) , how much will consumers pay for good, how much will the government make in revenue? What types of goods tend to be inelastic? Should the government tax...

5. Suppose the quantity of good X demanded by individual 1 is given by X1 =...

5. Suppose the quantity of good X demanded by individual 1 is given by X1 = 10 − 2PX + 0.01I1 + 0.4PY and the quantity of X demanded by individual 2 is X2 = 5 − PX + 0.02I2 + 0.2PY a) What is the market demand function for total X (= X1+X2) as a function of PX, I1, I2, and PY . b) Graph the two individual demand curves (with X on the horizontal axis, PX on the...

The general demand function for Sobolo on campus is where QD is quantity demanded of good...

The general demand function for Sobolo on campus is where QD is quantity demanded of good Sobolo each month, PA is price of Sobolo, M is students income, PB is price of related good Brukina, T is students taste index, PE is price students expect to pay next month for good A, and N is number of buyers in the market for Sobolo. i. Interpret the intercept parameter in the general demand function. ii. What is the value of the...

Question