In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. As a result, the government is able to raise $750 per month in tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by 25 per month. 50 per month.
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- Suppose Mr. Alemu consumes two commodities, X and Y. The income of Mr.Alemu is $200, and price of X is 5 and the price of Y is 15. The demand function for the comnmodity is given as: Qx=100-0.75y +0.251px^1/3 + 2py^3/2 where Qx is quantity demand of commodity X. 7Px is the price of commodity X, py, is the price of commodity Y and I is income. Then: A. Find the price elasticity of demand. Decide whether it is elastic, unitary clastic or inelasticSuppose there are three (3) people in a market for bottles of perfume; Mutumbu, Jasanu and Julius The individual demand for perfumes for each of these consumers is given as 10 bottles for Mutumbu, 15 bottles for Jasanu and 25 bottles for Julius at $60 per bottle for perfume. Thus, the market demand for perfumes if the market price is $60 is. (a)40 bottles (b)60 bottles (c)80 bottles (d) None of theb aboveConsidering, QDx = - 4Px -0.02R + 2Pz, and assuming that the individual's income (R) is equal to $600, and the price of the good z (Pz) equals $10, if the individual's income (R) reduce to $300, will the individual's demand for good x increase or decrease? CALCULATE and GRAPHICALLY ILLUSTRATE the behavior of demand for good x. Then inform what kind of property this is.
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- Suppose Jolene buys apples weekly. If the price of apples were to drop, Jolene would experience in . a decrease an increase a decrease an increase a decrease total revenue consumer surplus her budget constraint marginal utility willingness to pay Suppose the government levies a tax of $0.50 per pack on the buyers of cigarettes. Suppose also that the price elastic- ity of demand for cigarettes is 1.2 and the price elasticity of supply is 0.7. Because this tax is levied on the sale of a specifi c good, it is an excise tax. a progressive tax. a regressive tax. a proportional tax. a lump-sum tax. After this tax is levied, total surplus will , and the price received by producers (not including the tax) will . increase decrease increase decrease increase increase by exactly $0.50 fall by exactly $0.50 fall by less than $0.50 fall by less than $0.50 increase by more than $0.50 If economists were to study the tax incidence in this cigarette market, they would…There are 40 people living in a village each having preference over apples andshirts represented by U(a,b) = a1/3s2/3, where a and s are amount of applesin pounds and shirts consumed, respectively. The price of a shirt is $10. Each villager has $300 income. Apples are supplied to the village by a farmer, whose supply function is S(pa) = 1000pa.Part a1What is the equilibrium price of apples? How many pounds of apples does eachvillager consume?Part a2What is the aggregate net consumer surplus at the equilibrium?Part a3What is the price elasticity of demand at the equilibrium?Part b1Suppose 50 more people move in to the village. What is the equilibrium pricenow? Part b2Are consumers better or worse off now? Why? If a consumer is worse off, byhow much additional income he/she needs to be compensated in order to be aswell off as in Part a.Jack has a utility function U(x1x2)=2(x1)(x2)^2 , and the price of x1 is 3$ and the price of x2 is $1 and Jack has an income of $90. a) How much of each good will he demand? Let’s now consider the case where the government imposes quantity tax which is a tax on the amount of a good consumed. b) A 1$ quantity tax (t) is placed on x1 so that now x1 costs $4 to Jack while his income and the price of x2 stay the same. How much of good x1 and x2 does he now demand? c) What will be the tax revenue of government? In other words, tax revenue is the amount equal to tax (t, which is 1$ here) times the quantity demanded by Jack (the answer of optimum x1 in part (B))? Government decided to give back all of the quantity tax revenue to Jack. In other words, his income rose by an amount equal to collected tax revenue in part (c). d) How much of good x1 and x2 does he demand now? (x1 still costs to Jack $4 but his income increased) e) Would Jack be as better off as he was before the quantity…
- Jenny has a utility function U(x, y) = 2xy + 1. The price of x is $1 and the price of y is $1, and her income is $20. A. How much x and y does Jenny demand? B. A tax is placed on x so that x now costs Jenny $2 while her income and the price of y stay the same. How much of good x does she now demand? C. Would Jenny be as well off as she was before the tax if when the tax was imposed, her income rose by an amount equal to $1 times the answer to part (b)?Many studies on rats and mice have established that charred meat grilled over hot coals causes cancer. Since the government cannot easily regulate home cooking methods, an alternative method has been proposed to discourage the consumption of barbecued meat. The proposal is to place a 100 percent tax at the retail level on charcoal briquets. Suppose the daily demand for charcoal was P= 100-Q/10 and the supply was P= 1 + Q./100 where P is in dollars per bag and Q is the number of 20 lb bags of charcoal sold weekly. a. What is the before and after - tax price of charcoal? b. Graph and show the deadweight loss due to the tax c. Why might this deadweight loss over estimate the loss to society from this tax?At the current market equilibrium, the price elasticity of supply for a certain good is much lower than the price elasticity of demand. if the government imposes a $5 specific tax on this good, who will bear more of the burden of the tax?