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- Market demand for Mandrake roots is given by Q=425-2P and marketsupply is given by Q=5P. The government of Sodden needs money, so it imposes a per unit tax of $5 on mandrake root. How much tax revenue do they raise with this tax?2. The government of Beach Island is currently inviting investors to bid for the exclusiveright to provide satellite television broadcast service to its residents. The marketdemand for this service is P=55-0.01Q, where Q is the number of households thatwould subscribe to the service and P is the monthly fee charged to the subscribers.The associated marginal revenue curve is MR=55-0.02Q. Funtime TV Company isinterested in bidding for the right to provide this service on Beach Island. It has aconstant average and marginal cost of R5 for providing the service to each household.(Hint: Write your answers in R and no decimals).A. If Funtime TV Company were to be awarded the exclusive right to provide cableservice on Beach Island, how many households would it service?B. If Funtime TV Company were to be awarded the exclusive right to provide cableservice on Beach Island, what price would it charge per household per month?C. If Funtime TV Company were to be awarded the exclusive right to…Market supply of Mandrake root is given by Q=4P. The government ofimposes a per unit tax of $5 and producers pay the tax. What is thehighest market price of Mandrake at which producers will sell at least 34units?
- A monopolist produces a certain good. The cost c for producing this good is given by c = 20q, whereq is the quantity produced. The (inverse) demand function for this product is given by p = 30 − 0.01q,where p is the price per unit of the product. We assume that the full produced quantity is sold. Thegovernment taxes the sales of the good and would like to maximize the received tax T .Suppose in first instance that the government introduces a tax of 4 monetary units per unit of theproduct sold. We determine how much the government then receives.Please no written by hand solution A firm's profit function is: π(x,y) = 96x - 6x^2 + 84y - y^2 - 2xy .Suppose the firm's production causes pollution and the local authorities decide to apply a tas on its production, T=t(x+y), where t is a parameter. Given the tax, the firm maximises their tax revenue. What is the maximum profit the firm can obtain? What is the demand elasticity of price for each commodity at their maximum point?A market has a demand function given by theequation Qd = 180 - 2P, and a supply function isgiven by the equation Qs = -15 + P. The marketis government-regulated, with price support per unit and production quotas. (NOTE: A production quota restricts the quantity of the good that can be produced. Firms are not allowed to produce more than the quota)(a) If the price is $72 per unit, what production quota is needed to ensure no shortages or surpluses? (HINT: Sketch the supply and demand equations.)(b) Considering the price support and the quota, calculate(i) the consumer surplus,(in) the producer surplus,(In) deadweight loss,Due to good weather, there is an increase in the demand for the good. The new demand equationis Qd = 190 - 2P. The government is trying todecide between two options:• Maintain the number of quotas and let the market adjust, or• Maintain price support and increase the number of quotas.Crinnamathemarinenidanidan maintain Suppose the government decides to maintain the…
- Global warming is mainly caused by Greenhouse gas (GHG) (i.e., CO2) emission. Aiming to be carbon neutral by 2060, China starts penalizing the polluting firms by introducing a specific tax to those firms. (Source: https://www.nature.com/articles/d41586-020-02927-9)Suppose you are the owner of a profit-maximizing firm in China that produces goods with carbon emission. The specific tax (with tax rate t) is imposed in proportion to the quantity of your firm’s output (q). The market of your firm’s product is assumed to be perfectly competitive. Assume there is no fixed cost: use a fully labelled diagram to show the effect of the tax on the cost curves, and briefly discuss the movement of the curves. (10 marks) Suppose China government decides to raise the tax rate. Discuss the impact of the rise on your firm's output level with economic models wherever necessary. (20 marks)Assume that to balance the benefits of providing electricity with its pollution costs, A. Treehugger recommends that the government imposes a tax $0.04 for every kilowatt hour (kWh) of electricity sold. If they do, how much of this tax is actually paid by the customer (consumer’s burden) and how much is paid by the firm (producer’s burden)?Consider the profit getting from selling x and y units of two commodities isgiven by as follows: i. P(x, y) = −0.1x2 - 0.2xy - 0.2y2 + 47x + 48y - 600. Find out theproduction levels for x and y that maximizes the profit. ii. Now assume that the total production is limited to 200 units. Find out theproduction levels that maximizes the profits.
- Squeak eClean produces commercial sanitizer used to clean tanker trucks that haul liquid food products such as milk. This sanitizer a commodity like any other and at the wholesale level, there are many domestic and foreign producers that compete vigorously. Suppose you have the following estimated market demand and supply functions for the sanitizer. Qd = 248.08 + 2.2Y - 0.6PC + 1.2 PS - 4P Qs = - 10 + 2P In these equations, Q measures output in gallons per month (in 1,000’s), P is the price per gallon of the sanitizer, Y is annual average household income (in 1,000’s), PC is an index of commodity prices, and PS is the average price per gallon of other types of sanitizer. After gathering the latest data, you find that average household income is $36,400, the current level of the commodity price index is 110.6, and the average price per gallon of other types of sanitizers is $48.50. Find the current equilibrium price and quantity in this market. Find the equilibrium price and…A market is perfectly competitive. Market Supply is given by Q=4P and Market Demand is given by Q=296-2P. Each extra product produced imposes a negative externality of $Q. Implement the optimal Pigouvian tax/subsidy that implements the efficient outcome. Determine the total tax revenue the government earns with this tax or subsidy.Suppose the demand equation is 200x + 10p = 10000, where x is the num- ber of items sold when the per unit price is p dollars. Determine (a) the rev- enue function,(b) the domain of the revenue function,(c) the revenue derived from the sale of the 20th item the marginal revenu(de)wthen x = 20,level of production that maximizes the revenue,and the maximum revenue.