Market demand and supply for cases of beer are given by Q = 875 – 5P and Q, = 20P. The equilibrium price is P= $35 per case and the equilibrium quantity is Q = 700 cases. Suppose the government decides it wants to use the beer market toraise some tax revenue. It levies a tax of $8 per case on beer consumers. Complete parts a through e below......a) What is the equation of the demand curve with the tax included? Let P; be the amount producers will receive.Qq =+ OP:(Simplify your answers.)b) What is the new, after-tax equilibrium?The after-tax equilibrium price is $and the quantity is(Round to two decimal places as needed.)c) What price do consumers now pay?$(Round to the nearest cent as needed.)d) Who has the larger burden of the tax?Consumers pay $more than before the tax. Firms receive $less than before the tax. Therefore,bear the larger burden.(Round to the nearest cent as needed.)e) What is the deadweight loss due to the tax?$(Round to the nearest cent as needed.)firmsconsumers

Equilibrium is achieved at the output level where Qs equals Qd.

Answered: Market demand and supply for cases of…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.10P

See similar textbooks

Similar questions

The following equations represent the inverse supply and demand functions in the market for Good B: PC = 180 - 2QD PP = 40 + 2QS where PC and PP are the prices paid by consumers and received by producers respectively. QD and QS are the quantities demanded and supplied, respectively. Suppose the government imposes a tax of $8 per unit of Good B. What is the incidence of this tax on consumers and producers?
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?
Suppose the inverse demand curve for good X is given by the equation Px=10-Qx/10 and the supply curve is perfectly elastic (horizontal) at RM1. Good X is presently taxed at RM2 per unit. Good Y (which is independent of good X) has an inverse demand curve Py=5-Qy/20 and is also elastic at RM1. Good Y is untaxed 1. How much tax revenue is collected and what is the excess burden of the RM2 tax on X 2. How much revenue is collected if the tax on good A is reduced to RM1 per unit and good B at RM1 per unit? 3. What is the total excess burden of taxing both goods at RM1 per unit?
The Health Ministry is evaluating the data of the soft beverages market. Demand function: QD=270−4P Supply function: QS=−70+4P Submit answers in two decimal places if you get answers in decimals/fractions (a) Find the Total Surplus. The authority is concerned about the increasing obesity rate in the country. Hence, they have decided to impose a tax of TK 5 per unit on soft drinks. Submit answers in two decimal places if you get answers in decimals/fractions (b) What is the total of new consumer surplus and producer surplus after government intervention?
Suppose demand and supply are given by:Qx d = 14 −  2Px and Qx s = 14Px-2b. Suppose a $12 excise tax is imposed on the good. Determine the new inverse demand function.
The market demand and supply functions for a good are: QD = 260 - 50P and QS = -40 + 10P. The equilibrium quantity and price are 10 and €5 respectively.Suppose the government imposes a tax of €0.60 per unit. The price paid by consumers after the tax will be €5.10€5€5.60€4.60
In a competitive market the equilibrium price, P, and quantity, Q, are found by setting QS = QD = Q in the supply and demand equations: P=aQS +b(a>0,b>0) P=−cQD +d(c>0,d>0) A) If the government levies an excise tax, t, per unit, show that: Q=d-b-t/a+c B)Deduce that the government’s tax revenue, T = tQ, is maximised by takingt=d-b/2
The demand for mineral water is P=10 – (2/3) Q and supply function for mineral water isP=1+(1/3)Qa) Find the equilibrium price and quantity and Price elasticities of demand and supply.b) Suppose a unit tax (t) is imposed on suppliers (t= 3TL). Find the new equilibrium.c) Find the price that consumers pay and the price that producers get after the tax.d) What is the burden of the tax on producers and consumers and explain how the tax burden isrelated to elasticities? thank you in advance.
Algebraically, solve for the after tax equilibrium price and quantity in the corn market, if the government collects a specific tax of t=$2.40 from customers. The before-tax linear demand function for U.S. corn is given as Q=15.6-0.5p and the original supply curve is given as Q=9.6+0.25p. Please show with a diagram.
Suppose the supply of a good is given by the equation QS=600P−1,200 , and the demand for the good is given by the equation QD=1,600−200P , where quantity (Q) is measured in millions of units and price (P) is measured in dollars per unit. The government decides to levy an excise tax of $2.00 per unit on the good, to be paid by the seller. Calculate the value of each of the following, before the tax and after the tax, to complete the table that follows: 1. The equilibrium quantity produced 2. The equilibrium price consumers pay for the good 3. The price received by sellers Before Tax After Tax Equilibrium Quantity (Millions of units) Equilibrium Price per Unit Paid by Consumers Price per Unit Received by Sellers Given the information you calculated in the preceding table, the tax incidence on consumers is per unit of the good, and the tax incidence on producers is per unit of the good. The government receives in tax revenue from levying an excise tax of $2.00 per unit on this good. True…
Consider a producer who faces a linear demand curve P = 24 – Q, where P is the price in dollar ($) and Q is the quantity demanded. The producer produces this good at a constant average and marginal cost of $6. Determine the price and quantity if the producer wishes to maximise profits. Suppose the government imposes a tax of $T per unit on the producer. How much will the consumer bear the tax burden? Explain.
Demand for apples is given by the function P=50-4q while supply is given by P=10+q. If a per-unit tax of $15 is placed on apples, What is new price after tax?

SEE MORE QUESTIONS

Recommended textbooks for you

Microeconomic Theory

Economics

ISBN:

9781337517942

Author:

NICHOLSON

Publisher:

Cengage

Microeconomics A Contemporary Intro

Economics

ISBN:

9781285635101

Author:

MCEACHERN

Publisher:

Cengage

Macroeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506756

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Microeconomic Theory

Economics

ISBN:

9781337517942

Author:

NICHOLSON

Publisher:

Cengage

Microeconomics A Contemporary Intro

Economics

ISBN:

9781285635101

Author:

MCEACHERN

Publisher:

Cengage

Macroeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506756

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Economics: Private and Public Choice (MindTap Cou…

Economics

ISBN:

9781305506725

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Microeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506893

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS