In another market, suppose that the demand and supply are represented by: qd = 400P-2 and...

In another market, suppose that the demand and supply are represented by: q_d = 400P^-2 and qS = 0.5P.

(a) Calculate the consumer surplus at market equilibrium.

(b) Suppose that now the government imposes tax at producer, in which producer must pay 5 units for every goods sold. How much is the reduction on consumer surplus?

(c) Based on answer (b), do you think that the consumer experiences tax incidence? Why?

Expert Solution

Rahul Sunny answered 2 years ago

The market for Soda was represented by the following demand and supply: Qd= -100P + 1150...

The market for Soda was represented by the following demand and supply: Qd= -100P + 1150 and Qs= 400P +100. After the FDA required additional information on calories on labels, the cost to the Bottling Co. increased and the Supply shifted to Qs= 400P + 150 a. What is the Pre-Regulation equilibrium quantity and price? b. What is the Post-Regulation Equilibrium price and quantity? c. What is the pre and post regulation producer surplus? d. Based on the change in...

Suppose that demand and supply for a competitive market are as follows: Qd = 320 -...

Suppose that demand and supply for a competitive market are as follows: Qd = 320 - P and Qs = -40 + 2P What would be the price and output combination that would result if firms in this market merged together to become a profit maximizing monopolist? By how much would the price change from the competitive level?

Suppose the market demand for cigarettes is: QD = 10 − P, and the supply of...

Suppose the market demand for cigarettes is: QD = 10 − P, and the supply of cigarettes is: QS = −2 + P, where P is the price per pack of cigarettes a. Graph the supply and demand curves. b. What is the equilibrium price and quantity sold of cigarettes? Show this on the graph. If the government imposes a cigarette tax of $1 per pack, c. What is the price paid by consumers? d. What is the price faced...

The demand for milk is represented by: P = -0.5 QD + 7.2 The supply for...

The demand for milk is represented by: P = -0.5 QD + 7.2 The supply for milk is represented by: P = 1.2QS + 2.8 Qty are in millions of gallons per week. Now suppose that the government levies a $.51 excise tax per gallon on the sellers. Calculate the part of the tax borne by the consumers in this market and enter using 2 decimal places. Help please, thank you! Where can I find your solution to the problem?...

Suppose Market demand is given as Qd = 60 – 2P. Market supply is given as...

Suppose Market demand is given as Qd = 60 – 2P. Market supply is given as Qs = 2P Also assume ATC = 0.4Q. a. How many units of the product would the perfectly competitive market supply? What would the equilibrium price be? b. What are the profit maximizing price and quantity if this market is a monopoly? c. Calculate the dead-weight loss created if this market started off as perfectly competitive but then became a monopoly.

Assume that the demand for commodity is represented by the equation P=50-Qd and supply by the...

Assume that the demand for commodity is represented by the equation P=50-Qd and supply by the equation P=25+Qs, where Qd and Qs are quantity demanded and quantity supplied, respectively and P is price. a. Compute and show on your graph the DWL if the government subsidizes the consumers of the good ( subsidy=$2/unit) b. Explain the gains from this trade.

Suppose the market demand is QD = 200−P and market supply is QS = 4P−100. A....

Suppose the market demand is QD = 200−P and market supply is QS = 4P−100. A. Suppose the government imposes a tax of t = 5 on producers. What is the incidence of the tax on consumers? Producers? B. What is the deadweight loss of the tax?

1. Suppose the demand for coffee mugs is represented by the following demand curve: Qd =...

1. Suppose the demand for coffee mugs is represented by the following demand curve: Qd = 50 – 2P. Further, suppose that the current price is $5. a. (5 points) What is the current quantity demanded? Show your work. b. (15 points) Calculate the current price elasticity of demand and show all your work. Interpret the number you calculated (I’m looking for more than just “elastic” or “inelastic". c. Suppose when the price of ice cream is $2 there are...

4. Suppose the market demand and supply functions are QD = 180 – 1.5P and QS...

4. Suppose the market demand and supply functions are QD = 180 – 1.5P and QS = 3.5P + 40. You have just graduated and moved to this city; as a new MBA and an entrepreneur, you are considering entering the market for this product. a. Determine the equilibrium price and quantity in this market. b. You’ve researched and found that most firms in the market currently experience costs such that TC = 15 + 45Q – 10Q2 + 1.5Q3....

Suppose that the market demand and supply for milk is given by Qd =120−6P and Qs...

Suppose that the market demand and supply for milk is given by Qd =120−6P and Qs = 12P − 60 a. Find the market equilibrium quantity, and the equilibrium price. (5 points) b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus (or shortage) if a price floor of $8 is imposed in this market. (5 points) c. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus (or shortage) if a price...

Question