Question
In: Economics
The table below presents the annual market for sofas in Akron, Ohio. Suppose the state government...
The table below presents the annual market for sofas in Akron, Ohio. Suppose the state government imposes a $200 excise tax on every sofa sold to be paid by customers at the point of sale.
Market for Sofas
| Price (dollars) | Quantity of Sofas Demanded | Quantity of Sofas Supplied | Quantity of Sofas Demanded with Excise Tax |
| $1,240 | 160 | 260 | 10 |
| 1,180 | 190 | 240 | 40 |
| 1,120 | 220 | 220 | 70 |
| 1,060 | 250 | 200 | 100 |
| 1,000 | 280 | 180 | 130 |
| 940 | 310 | 160 | 160 |
| 880 | 340 | 140 | 190 |
| 820 | 370 | 120 | 220 |
| 760 | 400 | 100 | 250 |
| 700 | 430 | 80 | 280 |
Instructions: Enter your answers as a whole number.
a. Before the excise tax is imposed, what are the equilibrium price and quantity of sofas in Akron?
P = $
Q = sofas
b. Including the excise tax, what is the new equilibrium price consumers pay for sofas after the tax is imposed?
$
c. After the excise tax is imposed, what is the new equilibrium quantity of sofas?
sofas
d. What is the total amount of revenue collected by the government from the excise tax on sofas?
$
Solutions
Expert Solution
a) Equilibrium price = 1120
Equilibrium quantity = 220
b) Equilibrium price = 940
c) Equilibrium quantity = 160
d) Total revenue = 200*160 = 32000
Rahul Sunny answered 1 year agoRelated Solutions
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