Consider the oil industry in Kepler-62f, characterized by the following supply and demand curves: 10P=8+2Q and P=100−10Q. For, realism assume P is in $/gallon and Q is in million gallons. The government decides that consumption of oil has negative environmental consequences, and impose a tax of $1/gallon. What is the tax burden on consumers and producers respectively? What is the deadweight loss imposed by this tax policy and the government revenue?

Consider the oil industry in Kepler-62f, characterized by the following supply and demand curves: 10P=8+2Q and P=100−10Q. For, realism assume P is in $/gallon and Q is in million gallons. The government decides that consumption of oil has negative environmental consequences, and impose a tax of $1/gallon. What is the tax burden on consumers and producers respectively? What is the deadweight loss imposed by this tax policy and the government revenue?

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter4: Markets In Action

Section: Chapter Questions

Problem 7SQP

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