1. draw a diagram that illustrates the effect of the luxury tax in the yacht market...

1. draw a diagram that illustrates the effect of the luxury tax in the yacht market (i already did this, i think its just a shift of the supply curve to the left???)

2. how does the tax cause yacht builders to lose their jobs (or go out of business)? As part of your answer, use your diagram to illustrate the impact of the tax on yacht builders that lose their jobs (or go out of business).

3. how does the tax affect yacht builders that dont lose their jobs (stay in business)? As part of your answer, use your diagram to illustrate the impact on yacht builders that dont lose their jobs (stay in business).

4. how does the tax affect yacht buyers? As part of your answer, use your diagram to illustrate the two ways that buyers of yachts are impacted by the tax.

Expert Solution

1. As a result of the tax, the supply curve shifts to the left from S to S1.

2. Yatch builders lose their jobs because, the quantity of yachts in the market falls from 9 to 7. So,producers decrease the production of yatches. Those producers who have a reservation price of more than 3.60 (indicated by the red part of suppy curve S, close down production. So, the yacht makers (workers) lose jobs.

3. Those who stay in business get lower revenues. Before tax, revenues were $28 (4.00 * 9 = 36). After tax now, their revenue is $25.20 (3.60 * 7 = 25.20). So their profits are down.
Producer surplus before tax = ½*(4.00-2.20)*9 = 8.1
Producer surplus after tax = ½*(3.60-2.20)*7 = 4.9
Producer surplus has decreased. Which means producers are wrse off.

4. After tax, buyers have to pay a higher price. The price is higher by $0.80. (4.80 - 4.00 = 0.80)
Secondly, there is less quantity in the market now. Quantity has fallen by 2 untis.
So, those buyers whose willingness to pay is less than $4.80 (indicated by the red part of the demand curve) are unable to buy a yacht.
Consumer surplus decreases.
Consumer surplus before tax = ½*(7.60 - 4.00)*9 = 16.20
Consumerr surplus after tax = ½*(7.60-4.80)*7 = 9.80
So, consumers are also worse off.

Rahul Sunny answered 1 year ago

For each of the following statements, draw a diagram that illustrates the likely effect on the...

For each of the following statements, draw a diagram that illustrates the likely effect on the market for Toyota cars. Indicate in each case the impact on equilibrium price and equilibrium quantity.. A Mechanic Engineer warns that new Toyota cars overheats during long journeys. b. The price of rubber which is used to produce tyres reduces. c. A fall in the price of Nissan cars. d. A rise in bus tariffs . e. A successful advertising of...

Draw a diagram that illustrates the hyperconjugation that explains these phenomena: - more substituted alkenes have...

Draw a diagram that illustrates the hyperconjugation that explains these phenomena: - more substituted alkenes have lower heats of hydrogenation - more substituted carbocations are more stable - staggered conformations are lower in energy than eclipsed - allylic SN2 is faster than non-allylic Be sure to use shading to indicate the location of nodes and use arrows to show overlap. Thank you!!!

Question 5 – Draw a diagram which illustrates the difference between a multi-line queue and a...

Question 5 – Draw a diagram which illustrates the difference between a multi-line queue and a single-line queue.

draw a diagram that illustrates how the Rybczynski Theorem works, demonstrating what happens clearly

1. Please draw a supply and demand diagram for the “Market for Pasta” and answer the...

1. Please draw a supply and demand diagram for the “Market for Pasta” and answer the following questions (Label all axes and curves). a. Assume pasta and red wine are Complements. Furthermore, suppose the price of red wine increases. Illustrate the effect of the price change on the Demand Curve for Pasta. b. Additionally, there is a (positive) technological improvement in pasta production. Illustrate the effect of the new technology on the Supply Curve for Pasta. c. How do the...

1. For each of the following events draw a diagram of the foreign exchange market for...

1. For each of the following events draw a diagram of the foreign exchange market for dollars in equilibrium, and show the effect on the demand curve and/or the supply curve of dollars as a result of each of the events. Does the dollar rise or fall in value? i) Interest rates in the United States rise. ii) Speculators become convinced that the future value of the Japanese yen will be higher relative to the dollar than it is today....

1.)Diagram the effect on the lumber market when it is being impacted by the slowdown in...

1.)Diagram the effect on the lumber market when it is being impacted by the slowdown in home and other construction. It is also facing increased costs for labor and equipment. Label and title completely. 2.) Diagram the effect on the corn market when grain storage capacity in the United States is almost maxed out. Label and title completely. 3,)Given the following two estimates for supply and demand, solve for the market equilibrium price and quantity. Be sure to show all...

Q2. Draw a neatly labelled diagram indicating the price effect – the direction of substitution effect...

Q2. Draw a neatly labelled diagram indicating the price effect – the direction of substitution effect and the direction of income effect separately, for a normal good when price of Good-X (on X-axis) increases. Q3. Given a supply curve equation Qs=500(P-2) and demand curve equation Qd=11000-1000P. Find the equilibrium price and quantity. Draw a neat diagram of the equilibrium situation with everything labelled properly. Calculate consumer surplus, producer surplus and deadweight loss (if any) at equilibrium. Suppose the government mandates...

Draw a diagram which illustrates the difference between a multi-line queue and a single-line queue.

Draw a diagram that illustrates lipid digestion and absorption, make sure you include where these steps...

Draw a diagram that illustrates lipid digestion and absorption, make sure you include where these steps are occurring and the important role of bile! Make sure it is clearly labeled and include a brief description for any sequences and processes.

Question