Question

In: Economics

Per-unit Tax: The Isoland widget market has the following supply and demand functions: Supply: P =...

Per-unit Tax:

The Isoland widget market has the following supply and demand functions:

Supply: P = 20 + 2QS

Demand: P = 160 − 2QD

Suppose a per-unit tax of $40 is imposed on this market.

Draw a picture and calculate: (a) Price consumers pay (b) price producers receive (c) Total tax revenue (d) Consumer surplus (e) Producer Surplus (f) Consumer tax burden (g) Producer tax burden (h) Total welfare (i) Deadweight loss

Solutions

Expert Solution

​​​​​​

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Per-unit Tax: The Isoland widget market has the following supply and demand functions: Supply: P =...
Per-unit Tax: The Isoland widget market has the following supply and demand functions: Supply: P = 20 + 2QS Demand: P = 160 − 2QD Suppose a per-unit tax of $40 is imposed on this market. Draw a picture and calculate: (a) Price consumers pay (b) price producers receive (c) Total tax revenue (d) Consumer surplus (e) Producer Surplus (f) Consumer tax burden (g) Producer tax burden (h) Total welfare (i) Deadweight loss
Assume the market for beef is described by the following demand and supply functions: Q(p) =...
Assume the market for beef is described by the following demand and supply functions: Q(p) = -6 + 6P…………………………………(1) Q(p) = 50 – 2P^2…………………………………(2) (a)Which of the two equations is the demand curve? How did you know? (b)Find the equilibrium price ($) and equilibrium quantity transacted (000 lb.)in this market. (c)Determine the price elasticity of demand at equilibrium for this product. (d)Suppose the adoption of a new technology allows this beef producer to increase supply by 4, how will this...
Assume the market for beef is described by the following demand and supply functions: Q(p) =...
Assume the market for beef is described by the following demand and supply functions: Q(p) = -6 + 6p ………………………………… Q(p) = 50 – 2P^2 ………………………………… (a)Which of the two equations is the demand curve? How did you know? (b)Find the equilibrium price ($) and equilibrium quantity transacted (000 lb.)in this market. (c)Determine the price elasticity of demand at equilibrium for this product. (d)Suppose the adoption of a new technology allows this beef producer to increase supply by 4, how...
Assume the market for beef is described by the following demand and supply functions: Q(p) =...
Assume the market for beef is described by the following demand and supply functions: Q(p) = -6 + 6P…………………………………(1) 2 Q(p) = 50 – 2P…………………………………(2) (a)Which of the two equations is the demand curve? How did you know? (b)Find the equilibrium price ($) and equilibrium quantity transacted (000 lb.)in this market. (c)Determine the price elasticity of demand at equilibrium for this product. (d)Suppose the adoption of a new technology allows this beef producer to increase supply by 4, how will...
Consider a market that faces the following market supply and demand functions Q S = 2 + p
Consider a market that faces the following market supply and demand functions Q S = 2 + p Q D = 10- 1/2 p where identical firms face the total cost function of T C = 4 + q + q2 a) What is the market price? b) Derive the average variable cost, average total cost, and marginal cost functions. c) In the short run, how much does each firm produce? d) In the short run, how much economic profit...
Consider the following market demand and supply functions: Qd = 14 - p Qs = -6...
Consider the following market demand and supply functions: Qd = 14 - p Qs = -6 + p a) Calculate the perfectly competitive equilibrium price, quantity, consumer surplus, producer surplus, and total surplus. b) If an output tax t = 2 is imposed on consumers, calculate the new price, quantity, consumer surplus, producer surplus, and total surplus. What is the deadweight loss? Total taxes collected? (Note: an output tax shifts the demand curve intercept downward by the amount of the...
QD=40-2P and QS=P-8 represent market demand and supply functions for a good. If each unit of...
QD=40-2P and QS=P-8 represent market demand and supply functions for a good. If each unit of the good produced involves external costs of $4 (i.e. MEC=4), then (a) what amount of good is produced in the market equilibrium? (b) What are marginal social benefits(MSB) and marginal social costs (MSC) at the market equilibrium quantity?
Suppose that a market has the following demand and supply functions (normal) : Qd=10-p and Qs=2P-2...
Suppose that a market has the following demand and supply functions (normal) : Qd=10-p and Qs=2P-2 Graph the demand and supply 1. what is the equilibrium price 2. what is the equilibrium quantity 3. what is total surplus at this equilibrium 4. If the government imposed a $3/unit excise tax on producers in this market, what would be the new price that consumers pay? 5. If the government imposed a $3/unit excise tax on producers in this market, what would...
You are given the following market supply and demand curves in the Widget industry: QD =...
You are given the following market supply and demand curves in the Widget industry: QD = 250 – 5p QS = 10p – 100 Next, assume that the government has granted a monopoly to ABC Company to produce widgets. Answer the following questions based on this information: (a) What is the marginal cost curve for ABC Company? (b) What is the equation for the marginal revenue curve for ABC Company? (c) Given your answers to parts (a) & (b), what...
The market for a product has the following inverse demand and supply functions Pd= 120 -...
The market for a product has the following inverse demand and supply functions Pd= 120 - Qd Ps   = 0.5Qs. Suppose the state government levies a tax of $15 on each unit sold, imposed on the consumers. Find the prices that consumers pay (Pd) and the producers receive (Ps) and the new quantity traded in the market, Q**. Show on your diagram. What is the incidence of the tax on consumers and what on producers. How much money does the state...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT