Help! 4.Suppose that the demand curve is vertical while the sup-ply curve slopes upward. If a tax is imposed on sellers, who ends up paying it?

1:About vertical curve A vertical demand curve implies perfectly inelastic demand, i.e the quantity…

Answered: 4. Suppose that the demand curve is…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 32RQ: What is producer surplus? How is it illustrated on a demand and supply diagram?

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Only typed answer Green et al. (2005) estimate that the demand elasticity is minus−0.47 and the long-run supply elasticity is 12.0 for almonds. The corresponding elasticities are minus−0.68 and 0.73 for cotton and minus−0.26 and 0.64 for processing tomatoes. If the government were to apply a specific tax to each of these commodities, what incidence would fall on consumers? The incidence of a specific almond tax that would fall on consumers is nothing___percent. (Enter numeric responses using real numbers rounded to one decimal place.)
18. Suppose the supply curve and the demand curve both have unitary elasticity at all prices. The price increase to consumers resulting from a specific tax of $1 imposed on sellers will be A) $1. B) 50 cents. C) zero. D) impossible to calculate without knowing the slope of the supply curve.
17. Consider a perfectly elastic demand curve at p = 10, and a supply curve given by the following equation: p = 5 + 3q. Suppose that a tax of $3 per unit is imposed on producers. Which of the following statements is true? (A) Consumer Surplus is zero. (B) The tax burden is entirely on consumers. (C) Producer Surplus is zero. (D) Consumers pay $2 of the tax, while producers pay $1 of the tax.
The market for pizza is characterized by adownward-sloping demand curve and an upwardsloping supply curve.a. Draw the competitive market equilibrium.Label the price, quantity, consumer surplus, andproducer surplus. Is there any deadweight loss?Explain.b. Suppose that the government forces eachpizzeria to pay a $1 tax on each pizza sold.Illustrate the effect of this tax on the pizzamarket, being sure to label the consumer surplus,producer surplus, government revenue, anddeadweight loss. How does each area compare tothe pre-tax case?c. If the tax were removed, pizza eaters and sellerswould be better off, but the government wouldlose tax revenue. Suppose that consumers andproducers voluntarily transferred some of theirgains to the government. Could all parties(including the government) be better off than theywere with a tax? Explain using the labeled areas inyour graph
1. Suppose that the demand curve for a good is given by D(P) = 100/P, what price will maximize revenue? 2. If D(P)=12 -2P, what price will maximize revenue? 3. If the market demand curve is D(p) = 100 - 0.5P, what is the inverse demand curve? 4. Show that when the elasticity of demand is equal to one, the marginal revenue of producing an extra unit of a good is zero.
Given the supply and demand fucntion Supply- Q= 200p-500 Demand- 5000-300p Suppose that the president is concerned that they are producing Deadweight Loss in this case and are not even raising any revenue. The president proposes instituting a tax that will still result in a Q of 600 units, but, as the presdient says, it would also increase Total Surplus because of the revenue it raises. If the Presdient wants to reduce the quantity sold in this market to be equal to 600 units, then what size tax does the presedient need to put into place?
Price elasticity of demand for gasoline is estimated to be -0.3 in the short run and -1.2 in the long run. A decrease in taxes on gasoline would:O A. raise tax revenue in both the short run and long runO B. ower tax revenue in both the short run and long runO C. lower tax revenue in the short run but raise tax revenue in the long runO D. raise tax revenue in the short run but lower tax revenue in the long run
Assume that demand in the market for consoles is QD = 1000 - P and supply is QS = 2P - 200. d) Suppose that the government imposed a $300 price ceiling on consoles. How many units are sold? e) What is consumer surplus now? What is producer surplus? What is the "deadweight loss" from this policy?
What is producer surplus? How is it illustrated on a demand and supply diagram?
a. Assume that the elasticity of demand for Fanta is -0.5 while the elasticity of supply is 0.7. Assuming further that a tax of K10 is applied on each bottle of Fanta sold, how much of this will be borne by producers. b. Assume that the price of good X is K10 while that of good Y is K20. A consumer has allocated consumption between the two goods in such a way that the marginal utility of X is 15 utils and that of Y is 25 utils. Is this an optimal consumption bundle? If not, what should the consumer do to reach the optimum?

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4. Suppose that the demand curve is vertical while the sup- ply curve slopes upward. If a tax is imposed on sellers, who ends up paying it?