in Iceland, demand and supply for television use (pay per view) by choice is described by the following demand and supply functions (v represents price per item) Demand = 198 - 2v Supply = -2 + 2v The world market price for TV use is ISK 30. Price per item. b)Calculate domestic production, domestic consumption and import. Draw a picture and calculate and benefit from the opening of a business (pretend that there was no VAT for freedom). c) Due to the pressure of special interest groups of domestic producers, a decision is now made to impose a 30% duty on the world market price of imports (foreign streaming services), but the government has now found that traditional duty can be collected through credit card companies' transactions (no VAT). i) What will be the price, imports, demand and domestic supply. ii) How does producer and consumer profit change from point b)? iii) What will be the macroeconomic loss due to duty compared to free trade without VAT?

in Iceland, demand and supply for television use (pay per view) by choice is described by the following demand and supply functions (v represents price per item) Demand = 198 - 2v Supply = -2 + 2v The world market price for TV use is ISK 30. Price per item. b)Calculate domestic production, domestic consumption and import. Draw a picture and calculate and benefit from the opening of a business (pretend that there was no VAT for freedom). c) Due to the pressure of special interest groups of domestic producers, a decision is now made to impose a 30% duty on the world market price of imports (foreign streaming services), but the government has now found that traditional duty can be collected through credit card companies' transactions (no VAT). i) What will be the price, imports, demand and domestic supply. ii) How does producer and consumer profit change from point b)? iii) What will be the macroeconomic loss due to duty compared to free trade without VAT?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.12P

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in Iceland, demand and supply for television use (pay per view) by choice is described by the following demand and supply functions (v represents price per item) Demand = 198 - 2v Supply = -2 + 2v The world market price for TV use is ISK 30. Price per item. a) Calculate and draw a balance on a picture i) if no foreign trade is allowed and foreign providers are excluded by excluding IP addresses. (ii) if 14% VAT is levied on domestic broadcasters and foreign trade is prohibited. The tax is collected by consumers (no collection costs). What is the welfare loss from the tax? Show a picture. iii) how is the tax burden divided into point ii) and what are its explanations? b) Calculate domestic production, domestic consumption and import. Draw a picture and calculate and benefit from the opening of a business (pretend that there was no VAT for freedom).
in Iceland, demand and supply for television use (pay per view) by choice is described by the following demand and supply functions (v represents price per item) Demand = 198 - 2v Supply = -2 + 2v The world market price for TV use is ISK 30. Price per item. a) Calculate and draw a balance on a picture i) if no foreign trade is allowed and foreign providers are excluded by excluding IP addresses. (ii) if 14% VAT is levied on domestic broadcasters and foreign trade is prohibited. The tax is collected by consumers (no collection costs). What is the welfare loss from the tax? Show a picture. iii) how is the tax burden divided into point ii) and what are its explanations? b) Domestic tech nerds have avoided technical barriers to using foreign streaming services (VPN gymnastics) and the government does not have the ability to collect VAT on that use and subsequently decide to stop collecting VAT on domestic use: Calculate domestic production, domestic consumption and import. Draw a picture…
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