Demand Function: Qd=4,000−200p Supply function: Qs=100p−500 A president is presenting instituitiong a tax that will reduce quanityt to 500 units, the presdient says it will increase total surplus becasue of the revenue a) If the presdient wants to reduce the quantity sold in this market to be equal to 500 units, then what size tax does the presdient need to put? b) What is the Buyer’s and Seller’s Incidence of this tax? c) What is the Consumer Surplus, Producer Surplus, and Revenue Raised?

Demand Function: Qd=4,000−200p Supply function: Qs=100p−500 A president is presenting instituitiong a tax that will reduce quanityt to 500 units, the presdient says it will increase total surplus becasue of the revenue a) If the presdient wants to reduce the quantity sold in this market to be equal to 500 units, then what size tax does the presdient need to put? b) What is the Buyer’s and Seller’s Incidence of this tax? c) What is the Consumer Surplus, Producer Surplus, and Revenue Raised?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.10P

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Suppose that in a certain market the demand function for a product is given by p =−8q + 2800 and the supply function is given by p = 3q + 45. Then a tax of $5 per itemis levied on the supplier, who passes it on to the consumer as a price increase. Findthe equilibrium price and quantity after the tax is levied.
Q2. Suppose the government wants to reduce the consumption of alcohol in the market byintroducing a tax per bottle on the supplier's side. The government does not know what thedemand curve looks but knows that prior to the tax, the equilibrium is at point E1, for all theconsumers in the market. Suppose there are two scenarios of alcohol consumers in the market: i) an extremely inelastic demand curve for additive adult drinkersii) a demand curve that is moderately elastic for young drinkers Please show your answer directly to a well labeled figure and explain what would occur underthese two scenarios after adding the tax on the supplier's side, and on which scenario groupthis tax would best work for the government's objective?
The demand (D) and supply (S) function for a commodity are P =100 – 2Q and P = 10 + Q, respectively. (a) Find the equilibrium price and quantity. That is, find the price and quantity where the D and S functions intersect. (b) A new 10% tax is imposed on this commodity. Find the burden of the tax on demanders and the burden on suppliers. Also find the total taxes. [In order to insure that we all do this problem in the same way, let’s assume that the tax is imposed on the supply side of the market. In addition, the burden of the tax on demanders is the difference in price demanders pay when the tax is in existence less the price they paid when there was no tax. The burden on suppliers is the difference in price suppliers received when there was no tax and the net price (after remitting tax to the government) they receive when the tax is in existence.]
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Assume that the Demand Function is P = 16250 - 6Q and Supply Function is P = 2000 + 3Q, a tax of P1200.00 is imposed by the government to the producers. (Graph items 1-2) 1. How much taxc is paid by the Suppliers? 2.How much tax is paid by the consumers?
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?
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Q2: Suppose the demand function isp = 50 - 2q………………1and the supply function isp = 10 + 3q…………….2a) Find the market clearing price and quantity (equilibrium point)b) Sketch a graphc) Suppose the government imposes a per unit tax of $5 on producers, what would be the effect of this tax on market clearing price and quantity? ( show your answers)d) Find the consumer and producer tax burden.e) Calculate the tax revenue that the government received.
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The demand function for beer is given below, where p is the retail price and D(p) is the demand in gallons per capita. For the demand function, find the elasticity of demand E(p) for any price p. [Note: You will find that demand is inelastic. This means that taxation, which acts like a price increase, is an ineffective way of discouraging liquor consumption, but is an effective way of raising revenue.] D(p) = 6.913p−0.142
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A consumer derives utility from two goods (x and y), and her utility function is in the form u(x,y) = xy. Her income is 120 TL, and the prices of x and y are both 1 TL: a) Suppose that a tax of 1 TL per unit is levied on good x. How will this alter her utility maximizing market basket of goods? b) Suppose that instead of the per unit tax in (a), an income tax of the same total tax revenue is levied on the consumer. What is her utility maximizing market basket? c) Show your analysis in part (a) and (b) on a graph.