5 1. Consider the following demand and supply functions:Q4 1000 -2P(Demand)Q =-500 + 3P (Private Supply)O =-800 + 3P (Social Supply)%3!and the following panels.PalPalPaPrePricePeDGuaPaneltQuanlyPQuertityQuantyQuentitya. Which panel best shows this case? Justify your answer.b. Find the private market clearing quantity anid price and social quantity and price. Justify youranswer.C. Find the tax necessary to set demand equal to social supply. Justify your answer.d. Find the change in producer surplus, the change in consumer surplus and the tax revenues andthe net social loss (net social gain) for this tax Justify your answer.

Disclaimer: Since it is a multiple part question, I am providing the answer to the first three…

1. Consider the following demand and supply functions: Q- 1000 - 2P (Demand) Q --500 + 3P (Private Supply) (Social Supply) Q--800 + 3P and the following panels. Fal Pal Pe Pae Panelt Quentily Quy Qunty Qany a. Which paneol best shows this case? Justify your answer. b. Find the private market clearing quantity and price and social quantity and price. Justify your answer. C. Find the tax necessary to set demand equal to social supply. Justify your answer. Sumlus and the tax revenues and

1. Consider the following demand and supply functions: Q- 1000 - 2P (Demand) Q --500 + 3P (Private Supply) (Social Supply) Q--800 + 3P and the following panels. Fal Pal Pe Pae Panelt Quentily Quy Qunty Qany a. Which paneol best shows this case? Justify your answer. b. Find the private market clearing quantity and price and social quantity and price. Justify your answer. C. Find the tax necessary to set demand equal to social supply. Justify your answer. Sumlus and the tax revenues and

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 3PA

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a. The market demand and supply functions for VCR movie rentals are:QD=10-0.04P and QS=3.8P+4.Suppose that VCR movie rentals are taxed at $0.25 per unit. Calculate:i. the equilibrium quantity and price, point elasticity of demand in equilibrium andproducer surplus without tax.ii. the revenues generated by the tax, the loss in producer surplus and percentageof the burden of the tax falls on producers?b. Determine the "rule-of-thumb" price when the monopolist has a marginal cost of $25and the price elasticity of demand of -3.0.
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The annual demand and supply for liquor in a certain state is given by the following equation: Qd= 500,000 − 20,000P Qs=30,000P where P is the price per gallon and QD is quantity of gallons demanded per year. a. Suppose that a $1-per-gallon tax is levied on the price of liquor received by sellers. Use both graphic and algebraic techniques to show the impact of the tax on market equilibrium. b. Calculate (i) the excess burden of the tax, (ii) the amount of revenues collected, and (iii) the incidence of the tax between buyers and sellers.
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Question: What does McWilliams mean by "perverse" subsidies? Define and/or illustrate with an example. Draw a connection between perverse subsidies and the externalized costs (negative externalities) that we discussed in a previous module. ((This is the previous module: (Week 2: In an economic transaction between a producer and a consumer, an externalized cost or (negative) externality is a cost to someone who is not involved in the transaction. For example, the consumer doesn't pay for it, and the producer doesn't pay for it. Joel Salatin alludes to this concept when he talks about food that is not “honest.” List three externalized costs associated with food production (and consumption), and try to identify the third part(ies) likely to pay for each. Which cost on your list concerns you the most? This course benefits greatly from interaction and community building, so feel free to "like" and/or comment on your classmates' entries. For this discussion in particular, you may be better…
Suppose the equations below represent the market supply and demand for cellular service. QD = 50 – 0.25P QS = 2P – 76 a. Graph the supply and demand curves, and label the equilibrium quantity and price. b. Calculate the amount of Consumer Surplus and Producer Surplus in this market. c. Suppose the government enacts a per-unit tax of $9 for each unit sold. Illustrate the effect of this tax in your graph of the market for cellular service, and calculate the new market price and quantity sold. d. Calculate the amount of deadweight loss associated with this per-unit tax. e. Calculate the share of the tax burden that the sellers bear. f. Briefly explain why there is a relationship between the slopes of the supply and demand curves, and the tax burden on each side of the market.